Home > A Run On The Banks Begins In Italy As Italian Banking Stocks Collapse

A Run On The Banks Begins In Italy As Italian Banking Stocks Collapse

January 21st, 2016

investThe Italian financial meltdown that we have been waiting for has finally arrived. For quite a long time I have been warning my readers to watch Italy, and now people are starting to understand why.

Italian banking stocks continued their collapse for a fifth consecutive day on Wednesday, and nervous Italians are beginning to quietly pull large amounts of money out of the banks.

In particular, Monte dei Paschi is a complete and utter basket case at this point.

Have you ever wondered how billionaires continue to get RICHER, while the rest of the world is struggling?

"I study billionaires for a living. To be more specific, I study how these investors generate such huge and consistent profits in the stock markets -- year-in and year-out."

CLICK HERE to get your Free E-Book, “The Little Black Book Of Billionaires Secrets”

A staggering one-third of their loans are “non-performing”, and the stock price has fallen a staggering 57 percent since 2016 began.

Monte dei Paschi is going to need a major bailout, and the same thing could be said about almost all of the largest Italian banks.

But where is the money going to come from?

Italy Banner - Public Domain

As rumors of trouble at Monte dei Paschi spread, Italians are getting money out of the bank while they still can.

The following comes from the Daily Mail

Some Monte dei Paschi customers have been pulling savings out of the Italian bank, its chief executive said on Wednesday, as it faces a crisis over a mountain of bad loans that has wiped nearly 60 percent off its market value this year.

CEO Fabrizio Viola did not say how much money savers had withdrawn, or when the outflow began, though he said the fall in deposits was “limited” and that the bank could cope with it as he sought to reassure customers and investors.

Italian bank shares have lost 24 percent since the beginning of 2016 as investors, already rattled about global economic growth, have sold out of a sector with low profitability and about 200 billion euros ($218 billion) of loans that are unlikely to be repaid.

And investors are pulling money out of Italian banking stocks at an alarming pace as well. According to the Telegraph, Unicredit is down 27 percent since the start of 2016 and Monte dei Paschi has plunged a total of 57 percent so far this month…

Italian banking stocks crashed again on Wednesday, continuing a month of poor performance and raising questions over the sustainability of the industry in its current structure – and even if it could end up in the same boat as Greece’s banking sector.

Long-suffering Monte dei Paschi’s stock dived another 18.5pc on the day, meaning the shares are down 57pc so far this month.

Even much more stable banks are witnessing a flight of investors – Unicredit’s shares are down 6pc on the day and 27pc since the start of the year.

Overall, the FTSE Italia All-Share Banks Index has plummeted 21 percent over the first three weeks of this year.

We normally only see numbers like this during a major financial crisis, and that is precisely what is happening.

Of course trouble has been building at Italian banks for a very long time. They have been exceedingly reckless, and almost all of them are absolutely saturated with bad loans at this point. Here is more from the Telegraph

The analysts estimate the average Texas ratio – a measure of bad loans versus a bank’s capital buffers – of Italian banks stands at around 105pc, compared with just over 50pc in much of the eurozone.

A Bloomberg analysis puts Monte dei Paschi’s non-performing loans at almost one-third of its asset book, followed by Banca Carige at 27.4pc and Banco Popolare at 26.2pc, all cripplingly high levels.

And all of this comes in the context of a much broader European financial meltdown. The carnage that began at the turn of the year continued on Wednesday. Here are some of the specific numbers from Business Insider

European markets dived into the red on Wednesday morning, and they didn’t come back out.

All major stock indexes on the continent had a pretty horrible day, with all but two, the DAX 30 in Germany, and the AEX in the Netherlands, falling more than 3%. The FTSE MIB in Italy, and the FTSE100 here in the UK are the biggest losers.

At the close Italy’s benchmark was down by 4.95% to 17,946 points, while the FTSE100 fell 3.39%, or 199 points.

At this point, almost all of the major European indexes have entered bear market territory.

Just check out how far stocks have fallen in some of the largest European nations since their 52-week peak…

United Kingdom: down 20 percent

Netherlands: down 22 percent

France: down 22 percent

Germany: down 24 percent

Turkey: down 24 percent

Italy: down 25 percent

Sweden: down 25 percent

Poland: down 26 percent

Portugal: down 28 percent

Spain: down 30 percent

Greece: down 44 percent

Overall, global stocks have now officially entered a bear market, and panic is spreading fast.

In the U.S., our markets are still in better shape than most of the rest of the world, so we don’t necessarily understand the severity of the situation quite yet. But let me assure you that what we are facing is incredibly serious. Even at the best of times, most of the major banks in Europe and Asia were on shaky ground, and all it was going to take was a major financial downturn for them to start toppling like dominoes.

Many people are now beginning to speculate that Italy may be the next Greece. Those that are saying this don’t truly grasp what is going on.

Pages: Next



Tags: , , , , , , , , , , , , , , , , , , , ,

Facebook Comments


  1. Weiss
    January 22nd, 2016 at 09:00 | #1

    Spot on–I live in Italy and believe me, you ain’t seen “sheeple” until you come here. I’ve been saying for several years now that Italy already collapsed but Italians just haven’t noticed yet! With some notable exceptions up north, the entire freaking nation could be in flames, and people would still be focused on what they’re going to eat for dinner tonight, and whether their shoes perfectly match their suit or not…

  1. No trackbacks yet.

Copyright 2009-2016 WBC Media, LLC