Italian banks fail ECB stress test

MILAN – Shares in Montepaschi di Siena (MPS) and Carige plummeted on the Milan Stock Exchange Monday after failing the European Central Bank’s stress test.

 Seven further Italian banks scraped through the test, having been saved to a large extent by emergency measures undertaken over the past year. These seven were: Banco Populare, Banco Populare Emilia Romagna, Banco Populare di Sonrio, Credito Valtellinese, Veneto Banca, Bpm and Populare di Vicenza.

 The report, published over the weekend, uncovered a 2.1 billion euro shortfall in capital for MPS, making it the weakest bank in Europe. Trading on shares has since been halted due to excessive volatility after prices fell by 20.1 per cent in less than a day. 

 Carige, with a smaller capital shortfall of around 810 million euros, suffered a fall in shares of 15.79 per cent. The bank has announced its intention of raising 650 million euros as quickly as possible through emergency capital raising measures. La Corriere della Sera speculates that an international merger could be the most expedient remedy to the shortfall.

 The Bank of Italy meanwhile claimed that the report had uncovered the Italian banking system to be mostly solid, after the two largest banks, Intesa Sanpaolo and UniCredit, passed easily.