Italian Banks

[BlueKelah]

Doesn't look good for the world oldest bank and Italy banking sector. ECB sure have to save otherwise really jialat liao, worse than Greece crisis, maybe this will give the heady markets a pause.

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Italy's BMPS reels from ECB deadline reports

[Italy's Monte dei Paschi di Siena saw its stock tumble more than 12 percent on Friday over reports the ECB had denied it more time to raise the cash it needs to avoid being wound down.
The world's oldest bank had on Wednesday asked the European Central Bank for two more weeks to find the funds, saying political instability created by Prime Minister Matteo Renzi's resignation had left investors reluctant to commit funds.]

[Non-performing loans on their books amount to a combined 360 billion euros, roughly a third of the eurozone's total bad debt.
And Moody's ratings agency hit Italy's banking sector with a new blow on friday by warning that it would downgrade the ratings of seven other banks and financial institutions.
Italy is in political limbo following Renzi's crushing referendum defeat on Sunday. President Sergio Mattarella is currently holding political consultations to try and reach an agreement on who should be made caretaker PM.]

[CY09]

In a free economy, a company will collapse and be liquidated; wiping out equity holders while bondholders only recover a portion of debt.

In the real world, the state intervenes and tries to prevent its major companies from winding up, in the process increasing the national debt. we have seen this in many countries: US, UK, China and now possibly, Italy. If every country goes down this path of protecting their large companies and racking up national debt, it is going to be an economic "war" of which country has bigger financial muscles.

IMO, the next crisis wont be a collapse of banks, but the financial collapse of a country who tried to save its companies suffering from overcapacity and mismanagement.