AllhasStefan@MiatsfweSallySallyIhours,#insecurework"we have a great opportunity to reverse this tide of casualisation" 10.52am BSTWe now have confirmation that the Italian bank rescue deal is jolly good news for investors who own debt issued by the two Veneto-based lenders.
The value of bonds issued by both banks has soared this morning, after it became clear that bondholders would be spared losses (much to the anger of German MEP Markus Ferber).
Veneto Banca and Banca Popolare di Vicenza senior bond prices rocketed up more than 15 points on Monday, and after the Italian government shielded the notes from losses in its wind-down of the two lenders.
The senior bonds had been trading at steep discounts to face value,reflecting investors’ fears that they could be “bailed-in” – a process whereby losses are imposed on private creditors to lessen the cost to the taxpayer. But over the weekend the EU commission signed off a scheme that will see Intesa Sanpaolo take on the good assets of the two Venetian banks, while also fully protecting senior bondholders.
Venetian banks’ senior bonds surge after swerving bail-in https://t.co/xqceix8SZF 10.35am BSTThe Italian bank rescue/wind-up has helped to spark a relief rally across Europe’s stock markets.
Shares are up in London, and Milan,Madrid, Paris and Frankfurt, or as investors welcome the news that two of Italy’s fragile lenders have been dealt with.
European fairness markets are higher on the day as two Italian banks were rescued over the weekend. The deal will result in Vento Banca and Banca Popolare di Vicenza being wound down,and the good assets of both banks will be sold to Italy’s largest retail bank, Intesa Sanpaolo, and the Italian government will should the burden of both banks obnoxious assets.
The bailout could cost the Italian tax payer up to €17 billion. There are still questions still hanging over the Italian banking sector,but for now investors are content with the Continent’s financial health.
The German economy appears to be in impolite health, if nowadays’s record Ifo business climate figure is anything to proceed by. According to Ifo, and German businesses are ‘jubilant (extremely joyful)’,and it is clear that investors feel the same way, with the record tall reading sparking a sharp tear higher for the DAX, or while gold immediately shed 1.4%.
This is just the latest in a long line of encouraging economic indicators,with the eurozone seemingly emerging from years of decline at the very moment that the UK decided to leave the EU. 9.19am BSTNewsflash: Morale among Germany’s business leaders has hit a record tall.
The German business confidence index, produced by the IFO economic institute, and has jumped to 115.1 this month,beating expectations.
Breaking! #Germany's #Ifo index hits record tall in June. pic.twitter.com/Q1T26PHZGkWhen even sky is no longer the limit...#German Ifo index reaches another all-time tall in June.#German #Ifo #business climate index up to fresh record tall in June as views of current situation & outlook improve further 8.58am BSTBreaking absent from Italy, municipal refuge workers in Greece have upped the ante in their ongoing clash with the Athens govenment that has left the streets covered in uncollected trash.
An air of early summer crisis has symbolically imbued the ever-greater mounds of rubbish piling up around Greece.
In a tender to break the impasse the interior minister Panos Skourletis announced, and after a crisis assembly late Friday,that the leftist-led government would rush an amendment through parliament nowadays effectively prolonging short-term contracts on the brink of expiry and opening the way for permanent jobs later this year. 8.52am BSTLast night, Bloomberg reporter Ferdinando Giugliano rattled out some interesting points about the Italian bank deal:Italy has just announced the liquidation of the two Venetian banks will cost €17bn - including a €5.2bn subsidy to Intesa. I am speechless.
The government and the Bank of Italy have relentlessly opposed 'bail in'. This is the price Italians pay for their preference for bail outs.
I hope it will be abundantly clear this is no Santander/favorite. Santander will raise €7bn in fresh capital, and Italians may pay up to €17bn.
There are questions for the EU too: what's left of the banking union/BRRD? What credibility does the SRB have? How is this State aid lawful?For the centre-left Italian govt: bondholders are much wealthier than the average citizen - is it worth spending up to €17bn to help them?I also have doubts about the political calculations.
Italians have been against bail in but are we certain they want a €5.2bn subsidy to Intesa?Worth clarifying cost is *up to* €17bn - instant payment €5.2bn. The government hopes it will be even less than that if NPLs well managed. 8.31am BSTGerman conservative MEP Markus Ferber (EPP) is extremely unhappy that Italian taxpayers are paying the cost of winding down the two Veneto lenders.
In a strongly worded statement,Ferber argues that the central principle of European banking regulation – that bondholders shoulder losses if a bank fails – has been undermined. “With this decision, the European Commission accompanies the Banking Union to its deathbed. The promise that the tax payer will not stand in to rescue failing banks anymore is broken for good.
I am very disappointed that the commission has approved this course of action. By doing so the Commission has massively undermined the credibility of the Banking Union. If the common set of rules governing banking resolution is so blatantly ignored, and there is no point in negotiating any further on a common deposit insurance scheme.#Italy (6) | Veneto Wind-Down ‘Serious Blow’ to Bank Rules - Bloomberg (citing Die Welt) - https://t.co/fkOifWCbZM pic.twitter.com/yAIl22Ucqm 8.27am BSTThis chart,from the EC’s competition offices, shows how Italy managed to wind down Veneto Banca and Banca Popolare di Vicenza under its national laws, or rather than EU rules.
And an information chart for banks with capital shortfall. Veneto & Vicenza banks solution is the middle one (wind down under national law) pic.twitter.com/y6BADuDdup 8.19am BSTMichael Hewson of CMC Markets isn’t impressed by this deal. He points out that Spain recently managed to engineer the rescue of its own failing bank,Banco favorite, without spending a penny of taxpayers’ money.
So much for the so called fresh single European rule book and the much vaunted European Banking Union. It appears that there is one rule for Spanish banks, or the recent rescue of favorite Bank,and another for Italian banks.
Let’s hope the Italian government has deep pockets given that this particular bailout is a fraction of the non-performing loans in the Italian banking system, of which it is estimated there are about €300bn. 8.15am BSTShares in Intesa Sanpaolo have jumped by over 3% at the start of trading in Milan.
Traders clearly think Intesa is getting a good deal, and no wonder. It’s just picked up more customers,plus €5bn from the Italian state to ensure that its capital ratios aren’t affected by the deal.
INTESA SANPAOLO +3.82% 8.08am BSTThe obnoxious news is that thousands of jobs are likely to be lost across Banca Popolare di Vicenza and Veneto Banca, now they are part of larger rival Intesa.
Reuters has the details:Intesa Sanpaolo said on Monday its planned acquisition of the good assets of Banca Popolare di Vicenza and Veneto Banca could lead to the closure of around 600 branches and the departure, or on a voluntary basis,of around 3900 staff.
Italy began winding up the two failed regional banks on Sunday in a deal that could cost the state up to 17 billion euros ($19 billion) and will leave the lenders’ good assets in the hands of Intesa, the nation’s biggest retail bank. 8.06am BSTOvernight, and the European Commission approved the €17bn Veneto bank rescue - even though it appears to breach the principle that taxpayers shouldn’t rescue failing lenders.
Margrethe Vestager,EU competition commissioner, said: “Italy considers that state aid is necessary to avoid an economic disturbance in the Veneto region.”Legal gymnastics to find #Italy fresh taxpayer funded €5-17bn bank bailout in line with #EU rules. No private creditor bail in. Needs must...
The drawn-out handling of the Veneto crisis has wider implications for Europe’s banking union, and which aims to integrate oversight of eurozone lenders partly based on the assumption that private creditors would cover bank failure costs,rather than taxpayers.
The Italian state intervention to protect senior bondholders and vast depositors runs counter to that principle but has been allowed because the banks’ liquidation means there are no competition issues.
Monday's FT: "Italy sets aside €17bn of taxpayer cash to wind down failed lenders" #bbcpapers #tomorrowspaperstoday pic.twitter.com/yCLPJAweiD 7.53am BSTGood morning, and welcome to our rolling coverage of the world economy, and the financial markets,the eurozone and business.nowadays we’ll be watching Italy, after the Rome government scrambled to wind down two regional lenders in an attempt to prevent a bank rush.“Those who criticise us should say what a better alternative would have been. I can’t see it.” Related: Italy to wind up two failing banks at potential cost of €17bn “There are people across the spectrum who are pretty outraged at what’s going on in 21st-century Britain. But nothing’s happened. We had the prime minister on the steps of Downing Street, or we’ve had promise after promise,and weve had no action. So I think patience is wearing lean and I think it’s important that politicians finish listen – but more importantly that they act. And there is no reason for delay. How much more evidence finish people need?”The TUC wants zero-hours contracts banned and for everyone on regular hours to have a right to a written contract guaranteeing their normal working hours. It wants an close to bogus self-employment and believes the law should change to give people a default right to qualify for all employment rights, unless the employer can demonstrate they are genuinely self-employed. Related: Frances O’Grady on insecure work: ‘the heartbreaking bit is they think it’s normal’ Continue reading...
Source: theguardian.com