Italian lenders climbed in Milan, leading gains in the European Stoxx 600 Banks Index, after Italy’s 10-year yield premium over benchmark German bunds shrunk to the lowest in two years.
Intesa Sanpaolo SpA (ISP), Italy’s second-biggest bank, rose 3 percent to 1.55 euros at 1:03 p.m., giving the bank a market value of 25 billion euros ($33 billion). UniCredit SpA (UCG), the largest lender, increased 1.4 percent to 4.77 euros. The FTSE Italia All-Share Banks Index gained 1.5 percent.
Italian banks, which invested part of the liquidity obtained at lower interest rates by the European Central Bank in government bonds, are the biggest holders of Italian sovereign debt. Intesa owns about 100 billion euros in government bonds, while Banca Monte dei Paschi di Siena, Italy’s third-biggest bank, holds 29 billion euros, more than three times its tangible capital.
Italy’s 10-year yield fell 3 basis points to 4.22 percent, while benchmark German rates yielded 1.87 percent, narrowing the difference to 235 basis points, the least since July 2011.
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