{"id":40860,"date":"2018-11-23T08:54:21","date_gmt":"2018-11-23T13:54:21","guid":{"rendered":"http:\/\/olduvai.ca\/?p=40860"},"modified":"2018-11-23T08:54:21","modified_gmt":"2018-11-23T13:54:21","slug":"the-big-bet-against-italian-banks","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=40860","title":{"rendered":"The Big Bet Against Italian Banks"},"content":{"rendered":"

The Big Bet Against Italian Banks<\/a><\/h3>\n\"Italy\"<\/picture>\n
\n

The eurozone\u2019s third-largest economy, Italy, is marooned in a deep political and economic crisis, with seeming endless problems: an economy that has barely grown in decades, sky-high unemployment rates, ballooning national debt, an inability to form a stable coalition government and, lately, a looming showdown with the EU over mounting debt.<\/p>\n

These have precipitated a wave of populism that has rejected the old establishment and brought in a new guard.<\/p>\n

Unfortunately, that has done little to resolve another Italian bugaboo: a massive banking crisis.<\/p>\n

European banks have accumulated about $1.2 trillion in bad and non-performing loans (NPLs) that have continued weighing down heavily on their\u00a0balance sheets. Italian banks are sitting on the biggest pile of bad debt: \u20ac224.2B ($255.9B), with NPLs and advances making up nearly a quarter of all loans.<\/p>\n

As if that is not bad enough, the banks now have to contend with potentially heavy penalties coming from Brussels after Italy\u2019s recalcitrant leadership refused to revise the country\u2019s fiscal 2019 budget to lower debt and borrowing.<\/p>\n

The sharks can already smell the blood in the water, and investors have been shorting Italian banking<\/a> stocks to death. Italian banks hold nearly a fifth of the country\u2019s government bonds.<\/p>\n

<\/a><\/p>\n

(Click to enlarge)<\/p>\n

Source: Bloomberg<\/em><\/p>\n

<\/a><\/em><\/p>\n

(Click to enlarge)<\/em><\/p>\n

Source: Reuters<\/em><\/p>\n

Short sellers have mainly been targeting medium-sized lenders as well as asset manager Banca Mediolanum and investment bank Mediobanca. According to FIS Astec Analytics data, the volume of these banks\u2019 shares on loan\u2014a good proxy for short interest\u2014has shot to its highest in 15 months.<\/p>\n

Short interest on Mediolanum\u2019s shares now stands at 8.7 percent of outstanding shares, while Mediobanca has 15 percent of its shares sold short.<\/p>\n

Rome Refuses To Back Down<\/strong><\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The Big Bet Against Italian Banks The eurozone\u2019s third-largest economy, Italy, is marooned in a deep political and economic crisis, with seeming endless problems: an economy that has barely grown in decades, sky-high unemployment rates, ballooning national debt, an inability to form a stable coalition government and, lately, a looming showdown with the EU over […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[23185,2014,195,279,284,285,6801,1464,11576],"class_list":["post-40860","post","type-post","status-publish","format-standard","hentry","category-economics","tag-alex-kimani","tag-banking-crisis","tag-debt","tag-eu","tag-european-union","tag-eurozone","tag-italian-banks","tag-italy","tag-safehaven"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/40860","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=40860"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/40860\/revisions"}],"predecessor-version":[{"id":40861,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/40860\/revisions\/40861"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=40860"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=40860"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=40860"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}