ML-Implode News - Italian Bank Shares Slump as Renzi Loss Adds to Uncertainty

UniCredit Group AG and Banca Monte dei Paschi di Siena SpA fell along with most Italian bank shares after Prime Minister Matteo Renzi's decision to resign added to uncertainty about their plans for shoring up their finances. Monte Paschi will decide within the next few days whether it will proceed with a planned capital increase, people with knowledge of the matter said.
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Monte Paschi is seeking as much as 5 billion euros by the end of the year to repair its buffers after selling 28 billion euros in bad loans at a loss. While the bank has persuaded investors to swap more than 1 billion euros of subordinated notes for shares, it has yet to announce a large-scale investor and any agreement with the banks that would underwrite a planned public share sale.

"The chances of a successful implementation of the capital plan within the original timeframe (before the end of the year) are slim," BNP Paribas analysts Geoffroy de Pellegars and Miguel Hernandez said on Monday. If the European Central Bank decides Monte Paschi needs to be recapitalized immediately, it could face a government-backed rescue that would impose losses on bondholders, they said. "The near-term outcome depends entirely on the ECB," according to the analysts.

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Italian Bank Shares Slump as Renzi Loss Adds to Uncertainty