Anxiety Rises Over Italian Bank Debt
The price of bond issued by Monte dei Paschi di Siena, Italy’s third largest lender dropped more than a tenth in the latest sign of growing investor concerns over the bad debts within the country. The amount of bank loans comes up to a combined 360 billion Euros in bad debt and is more than three times the bad bank loans in US on a percentage basis at the height of the financial crisis.
“The price of bond issued by Monte dei Paschi di Siena, Italy’s third largest lender dropped more than a tenth in the latest sign of growing investor concerns over the bad debts within the country.”
Italy’s banking system is considered to be one of the most vulnerable in the euro zone with a high level of non-performing loans (NPLs) — estimated to total 360 billion euros ($400.7 billion) — overshadowing the sector. The U.K.’s Brexit referendum has injected greater uncertainty into European growth forecasts, including Italy’s. That in turn has created worries about higher loan losses at the country’s banks, coupled with falling government bond yields that further hurt financial institutions’ margins.
About Monte dei Paschi di Siena
Monte dei Paschi di Siena is one of the main banks in Italy. It is the flagship of the MPS Group, which is a leader on the domestic market in terms of market share. Monte dei Paschi, familiarly called “il Monte,” was founded in 1472 under the auspices of the Republic of Siena. It became the ideal heir of Siena’s prestigious medieval mercantile and banking traditions, developing an efficacious system of credit to the advantage of the local economy.
In 1995, by decree of the Minister of the Treasury, the banking firm was transformed into a corporation called Banca Monte dei Paschi di Siena. The Bank operates, also through its subsidiaries, in the various sectors of banking and finance, from traditional banking to special credit to asset management, insurance, and investment banking, with more than 1,900 branches all over Italy and a presence in the world’s major economic and financial centers.
Visit: Monte dei Paschi di Siena
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