Italian Banks Collapse, Short Sales Banned As Loan Loss Fears Mount

 

Italian bank stocks are crashing (with BMPS down 40% year-to-date) as Reuters reports that investors are growing increasingly nervous about how the sector will cope with lower interest rates and a 200 billion euro ($218 billion) pile of loans that are unlikely to be repaid. The broad banking sector is down 4% with stocks suspended, and in light of this bloodbath, Italian regulators have decided in their wisdom, to ban short-selling of some bank stocks (which has driven hedgers into the CDS market, spking BMPS credit risk).

Italy’s banking index was down over 4 percent with shares in several lenders, including the country’s biggest retail bank Intesa Sanpaolo and the third biggest lender Banca Monte dei Paschi di Siena, suspended from trading after heavy losses.

Bloodbath for Italian financials in 2016…

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As Reuters reports,

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JP Morgan said this month Italian banks should be avoided because low rates are expected to put pressure on revenues more than in other countries and credit problems limit a recovery in provisions.

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“I think upside on cooperative banks this year is much more limited,” said a London-based equity sales person.

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And now, Italian regulators have re-enforced a short-selling ban (because that has always worked so well in the past)…

Consob adopts a temporary ban on short selling on Banca MPS shares.The ban shall apply immediately and shall last until Tuesday 19 January 2016 end of day.

Consob decided to temporary prohibit short sales of the share Banca MPS (ISIN code IT0005092165).

Full article: Italian Banks Collapse, Short Sales Banned As Loan Loss Fears Mount (Zero Hedge)