Italian Banks Rise as Government Approves Veneto Lenders Rescue

  • Intesa is biggest gainer on Milan’s benchmark FTSE MIB
  • Other Italian lenders rise as systemic instability avoided

Wheeler Says Italy Is Moving Towards Bank Bail-Ins

Italian banks led gains on the Milan benchmark and the Stoxx 600 Banks index after the government said it will commit as much as 17 billion euros ($19 billion) to clean up two failed banks in the Veneto region, while Intesa Sanpaolo SpA agreed to take over the good assets.

Intesa is the best performer on the FTSE MIB index, rising as much as 4 percent. BPER Banca SpA, UniCredit SpA, Unione di Banche Italiane SpA and Banco BPM SpA were all up more than 3 percent as of 11:03 a.m. in Milan trading.

“We see the solution adopted for the Venetian banks positively both for ISP and for Italian banks,” Andrea Filtri, an analyst at Mediobanca SpA, wrote in a note Monday. “We see virtually no risks attached to this transaction” for Intesa “but other banks can celebrate too as they have avoided the risk of having to foot a very painful bill via extraordinary installments to the Resolution Fund.”

Italy’s government tried for months to find a way to keep Banca Popolare di Vicenza SpA and Veneto Banca SpA afloat, including an appeal to wealthy businessmen in the region to contribute to a rescue. It rushed to approve emergency rules outlining liquidation procedures for the two Veneto banks after the European Central Bank on Friday declared the lenders failing or likely to fail, and said both would be wound up under Italian insolvency rules. Intesa agreed to purchase the good assets of the two banks for 1 euro, the lender said in a statement Monday.

“This is a happy end for the Italian banking system, for which is removed systemic risk and above all for Intesa, which is cherry-picking good assets for free,” Credit Suisse Group AG analyst Carlo Tommaselli wrote in a note.

— With assistance by Sonia Sirletti

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