Exams never end. After the stress of the ECB, the banks are now facing the test of the market which on Friday had bet on the "full" promotion for Italian institutions. The outcome of the vote, however, was more mixed.
In summary:
1) The institutes rejected in Europe are 25 out of 130, including 9 Italians, a figure to which the international press devotes much prominence. In reality, five institutions came into compliance between January and September, two others (Pop. Vicenza and Bpm) did so with measures computed with the Bank of Italy. Furthermore, as stated in the via Nazionale note, Italian banks have not received the aid enjoyed by others, starting with the German system (250 billion). But the negative effect remains.
2) However, it is easy to predict a positive reaction from Piazza Affari to the excellent report card of the Bigs: Banca Intesa (+6,7% last week) which recorded excess capital of 10,9 billion and Unicredit (+6,35%) , with excess capital of 8,75 billion.
3) Ubi, with a surplus of 1,76 billion, is a candidate as the natural aggregation pole of the Popolari system. For Duetsche Bank, the Lombard bank could take over Carige.
4) But attention runs the risk of focusing on the delicate if not critical position of Carige and, above all, Monte Paschi, already the protagonist of a rally in Piazza Affari on Friday (+16% during the week) in the hope that the institution could have avoided an increase of capital.
PERFUME: "WE ARE READY FOR ANY OPERATION"
Carige, which lacks 814 million, has already announced a capital increase of 500 million (assisted by Mediobanca) plus the sale of the insurance companies. But the buyer, the US fund Apollo, yesterday asked for new guarantees on the state of health of the bank before closing the operation.
The situation of Monte Paschi is more complicated, which has exceeded the Aqr but has a gap of 2,11 billion euros at the end of the stress tests, conducted on the basis of extremely pessimistic simulations. The hypothetical scenario, noted the general manager of the Bank of Italy, envisaged "a drop of 12 points of GDP over a three-year period which in the history of Italy has only been seen after the war".
The bank has already appointed UBS and Citigroup financial advisors for "the definition, structuring and implementation of the mitigation actions related to the capital plan, as well as to evaluate all the strategic options available to the bank". In simpler language, the MPS summit does not exclude any hypothesis, including the prospect of a takeover. “We are ready for any operation” said the president Alessandro Profumo.
On the part of the Bank of Italy, the deputy general manager Fabio Panetta (Italian member of the Supervisory board in Frankfurt) said yesterday, there is no preclusion in the face of a solution of this kind. The important thing is that any operations in this sense "make the bank more solid and capable of disbursing credit". “In that case – concluded Panetta – we would not be happy, but very happy”.
TOKYO ON THE RISE, ROUSSEF WINS BY A NARROW IN BRAZIL
Banking exams aren't the only “hot” topic of financial week. Asian stocks continued on the road to recovery this morning. Tokyo rises (+0,5%) ahead of Seoul (+0,6%). The only negative note concerns Hong Kong (-0,1%): the operating agreement with the Shanghai market has been postponed.
The euro is recovering, at 1,2699 against the dollar. In Brazil, outgoing president Dilma Roussef beat challenger Aecio Neves by just 3 points at the end of a very tough campaign from which a country split in two emerged.
The European Stock Exchanges reopen their doors after a series of sessions in which part of the ground lost since 8 October was recovered on the wave of the recession alarm. Piazza Affari (+2,8% since the beginning of the year) after six weeks of decline, rebounded by 4,2%. The European Stoxx index rises by 2,7%. In New York, the S&P 500 rallied 4%.
THE FED TOWARDS A STOP TO QE. AUCTIONS, STARTING WITH BOTS AT 6 MONTHS
On the macroeconomic front, the spotlight was turned on this morning by the German Ifo index, which is expected to rebound after last month's slide. In the USA, meanwhile, the PMI indicators are out today, increasingly followed to understand the trend of the economic situation. The key event of the week, however, will be the meeting of the FOMC, the monetary committee of the Federal Reserve, scheduled for tomorrow and Wednesday. Barring surprises, it will be the venue for deciding on the closure of the third Quantitative Easing, the longest and most demanding in financial history, which started on 13 September two years ago.
Once the offer of the Btp Italia has been exhausted, received in a minor tone by the markets (7,5 billion in funding), the Treasury is back in charge with the end-of-the-month auctions. We start tomorrow with 6,5 billion 6-month BOTs against 7,7 billion maturing.
MEDIOBANCA, THE FIRST TIME OF THE CHINESE AND MARIE BOLLORE'
The corporate agenda is also very rich. We start this morning with the quarterly reports of Cir, Cofide and Mediobanca. Tomorrow the institute's assembly in Piazzetta Cuccia, in addition to approving the financial statements as at 30 June, will appoint the new board of directors and the board of statutory auditors.
It will be the occasion for the debut among the shareholders of the People Bank of China, which last October 14 communicated the purchase of 2,001% of the institute. For the first time a woman will be appointed as vice president: she is Maurizia Angelo Comneno, designated by Unicredit. Marie Bolloré also joins the board, daughter of the Breton financier who at the end of September strengthened her position as second shareholder behind Unicredit with a 7,48% stake.
Mediobanca passed the European exam in all matters (including stress tests) without recourse to extraordinary measures: excess capital amounts to 765 million.
FCA QUARTERLY: GUIDANCE AT RISK
On Wednesday 29, during the first board meeting in the English office, FCA will unveil the 2014 guidance and any initials to strengthen the capital and support the ambitious investment plan. The panel of analysts, on the eve, expects an operating profit of 3,2-3,3 billion against the current estimate of the company between 3,6 and 4 billion. For the third quarter an operating profit of 940 million is expected (+10% compared to a year ago) and a turnover of 22,3 billion (+7%).
Forecasts are based on the weak recovery of the European market and the worsening of the Brazilian economy. Chrysler's volume growth (+18%) will not be sufficient to compensate for the slowdown in South America: competition on the US market should be reflected in margins.
ENI'S ACCOUNTS ATTACKING THE DROP IN CRUDE OIL
Eni will also communicate its quarterly accounts on Wednesday 29, which will be affected by the sharp drop in crude oil prices of 8 dollars lower than in the same period of 2013. Accounts in the red are expected for the gas and power and refining and marketing divisions. According to a survey among analysts, the adjusted net profit (excluding extraordinary items) for the third quarter should average an average of 861 million, (approximately -26,5% compared to the same period in 2013) while the EBIT is expected to be around 2,633 billion (from 3,439 billion in the third quarter).
SOUTH AMERICA HOT FOR TELECOM ITALIA
South America always hot for Telecom Italia. The company is negotiating the sale of the Tim Brasil towers to obtain the money needed to finance the 4G operation. Meanwhile, the collapse of Portugal Telecom has jeopardized the merger between the Lusitanian company and the fourth Brazilian operator Oì, making a merger between Oì and Tim Brasil unlikely.
Furthermore, Piazza Affari is called today to judge the agreement reached by Telecom Italia (+7,3% last week) with which the sale of Telecom Argentina to Fintech is postponed, David Martinez's company which is part of the syndicate of control (and board) of Monte Paschi. The Argentine law desired by President Christina Kirchner prohibits the financier from combining control of a telecommunications group with the share held in the TV of Clarin, the Buenos Aires newspaper.
While awaiting news (or a political turning point), Telecom and Fintech have agreed to postpone closing of the transaction by 30 months (550,6 million as the balance on the agreed price of 960 million dollars). In the meantime, the Argentine company, which has already paid 113,7 million to Telecom, has offered Telecom a $600 million bond as a pledge.
