|Bid||1.6000 x 0|
|Ask||1.6010 x 0|
|Day's Range||1.5930 - 1.6370|
|52 Week Range||0.9855 - 2.4300|
|Beta (3Y Monthly)||0.84|
|PE Ratio (TTM)||21.60|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||N/A|
(Bloomberg Opinion) -- For the umpteenth time, Deutsche Bank AG is ensnared in an alleged regulatory blunder. Except this time, the stakes are greater than its own integrity: Confidence in its regulator, the European Central Bank, is on the line too.The ECB is considering whether to probe Germany’s biggest bank for trading in its riskiest debt without the regulator’s approval, according to the German newspaper Sueddeutsche Zeitung. In an effort to maintain liquidity in the bonds, the firm’s securities unit continued to make a market in the notes well after they were sold to investors. Typically, banks need to be authorized to buy their own subordinated bonds because they count as equity capital that should help a lender absorb potential losses.By secretly buying the notes, Deutsche could have created a false market for the bonds, keeping a lid on its overall borrowing costs. That would also have left investors in the dark about how the bank’s capital might have been affected by the purchases. While it’s not clear how much of the debt Deutsche had on its books at any one time, nor what effect the trades may have had on the bonds’ prices, the purchases allegedly went on for years.What’s more, after being told by the ECB in 2014 that it should stop buying the bonds, Deutsche allegedly carried on doing it until 2017. Only then did it receive the regulator’s green light, and not retroactively.Why the ECB, which assumed regulatory oversight of Europe’s biggest lenders in 2014, is digging into this only now is a mystery. It may turn out that Deutsche misunderstood the guidance it received from the ECB, or that the numbers involved were immaterial, which led the ECB to put off a formal probe. Or maybe Deutsche thought it was able to make a market in the notes under terms spelled out in the offer documents. Deutsche and the ECB declined to comment for this piece.But the ECB is a young regulator and its record so far as an enforcer of the financial rulebook is somewhat spotty. Setting the record straight on what is potentially a serious breach is not inconsequential.The years in question were a period of turmoil for Deutsche. Faith in its ability to meet its obligations reached a nadir as clients worried whether the lender could afford a massive U.S. fine for selling toxic mortgage securities. Customers were pulling billions of euros of cash every day. There were fears that the firm would run out of reserves to pay interest to bondholders, specifically on its subordinated, additional Tier 1 notes. Some notes fell to a low of 70 cents on the euro in February 2016.The ECB must show it’s doing all it can to establish an account of what happened, not least because this isn’t the first time that its banking oversight has been called into question. At the height of Deutsche’s troubles in 2016, the ECB let the lender include in its stress test results the proceeds of a sale that hadn’t yet been completed, the Financial Times has reported. And earlier this year, I uncovered how the ECB had signed off on Banca Monte dei Paschi di Siena SpA’s $6 billion bailout even though it was aware the bank was probably insolvent. It’s quite possible that Deutsche acted in good faith. But if the ECB wants to build the trust of investors and depositors, it should eliminate any lingering doubts.To contact the authors of this story: Elisa Martinuzzi at email@example.comMarcus Ashworth at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.Within an hour of Prime Minister-designate Giuseppe Conte being granted a mandate to form a coalition, Italy locked in record-low borrowing costs for the next 10 years at a bond auction.Should he succeed in pulling together a new government, it would mark a brightening outlook for Italy’s embattled investors ahead of fresh budget negotiations with the European Union this fall.“What we are now seeing is a virtuous circle,” Holger Schmieding told Bloomberg Television Thursday. “Bond yields are falling, which in turn means Italy has more fiscal space, which then reduces the risk of a big confrontation with Brussels that could spook markets.”Italy’s bonds have surged this week as the Five Star Movement and Democratic Party looked set to form an alliance that although may be fragile, will be less hostile toward the EU. Ten-year yields dropped below 1% for the first time on record, significantly lowering borrowing costs for the nation and easing the pressure on its burgeoning fiscal deficit.The agreement also locks the leader of the far-right League, Matteo Salvini, out of government by postponing the possibility of fresh elections in which the party would likely gain a majority. Salvini has frequently locked horns with EU officials and pledged to bring tax cuts, which threatened to push the deficit through the bloc’s limits.Full AllotmentThe euro area’s third-biggest economy sold its full allotment of 6.25 billion euros ($6.9 billion) of securities. While pricing was weak, it was distorted by a surge in demand going into the auction, according to ING Groep NV. The decline in yields could save the Treasury more than 1% of gross domestic product on an annual basis, said Banque Pictet & Cie.“The market jumped into the auction so in reality the results are healthy,” said Antoine Bouvet, a senior rates strategist at ING. “If the market takes a very optimistic view on the prospects for the current coalition, 10-year Italy yields could reach 0.60%.”Democratic Party leader Nicola Zingaretti was quick to highlight the savings for the government from the lower auction yields. “That will now go into the pockets of Italians,” he wrote in a post on Facebook.Ten-year yields fell eight basis points after touching a record low 0.92%, with the spread over those on German securities at 166 basis points, the lowest level since the forming of the previous coalition in May last year. The drop in yields lifted shares of Italian banks, with Banca Monte dei Paschi di Siena SpA jumping 13%. The FTSE MIB Index is on track for its biggest weekly advance since February.Budget DeficitConte has until next week to forge a coalition that would avert the possibility of fresh elections. The new Five Star-PD government will seek to keep Italy’s 2020 budget deficit within EU limits, according to officials who asked not to be named discussing confidential plans, but any agreement is likely to be a shaky one given they have few issues that unite them.Even those who have long been bearish on Italian debt are showing a change of heart as the new coalition nears fruition. James Athey, a money manager at Aberdeen Standard Investments, was shorting the country’s bonds for much of the past 18 months, but is now buying higher-yielding longer-dated notes versus their short-dated peers, known as a curve flattening trade.“Whatever you think about the longevity of this potential coalition that we’re seeing at the moment, it’s certainly more centrist and less scary looking with respect to budgetary policy,” Athey said. “The stars are somewhat aligned at the moment.”(Updates with Democratic Party leader Zingaretti in eighth paragraph.)\--With assistance from James Hirai, Namitha Jagadeesh, Alessandro Speciale, Phil Serafino and John Follain.To contact the reporter on this story: John Ainger in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Ven Ram at email@example.com, Michael Hunter, Neil ChatterjeeFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
European shares staged a comeback from early losses on Tuesday as growth sectors led the charge, after Washington's move to delay tariffs on some Chinese goods provided a lift to battered global sentiment. The U.S. administration will delay imposing a 10% tariff on certain Chinese products, including laptops and cell phones, beyond September, the Office of the U.S. Trade Representative said on Tuesday. A separate list also included some imports that would be exempted altogether from tariffs.
Rating Action: Moody's upgrades the ratings of Class C and D notes in Siena Lease 2016-2 S.R.L. This is a cash securitization of lease receivables originated by MPS Leasing & Factoring S.p.A. (fully owned by Banca Monte dei Paschi di Siena S.p.A.) and granted to small and medium sized enterprises and individual entrepreneurs located in Italy. The upgrades are prompted by the increase in the credit enhancement ("CE") available for the affected tranches as a result of portfolio amortization.
(Bloomberg Opinion) -- Who knew there was investor appetite for subordinated Greek bank debt?Because of the relentless hunt for returns in yield-starved Europe, Piraeus Bank SA, one of Greece’s big four lenders, has been able to brave the European capital markets for the first time since the financial crisis.Piraeus isn’t opting for senior bonds, and is instead plumping for Tier 2 subordinated debt (which sits midway in the capital structure between top-rated debt and equity-like capital). This means the notes would be fully subject to investor bail-in rules, where bondholders take a financial hit should the bank fail.While the bank has been bolstering capital by offloading bad loans and selling assets, this issue will help it meet its commitments to the European Central Bank. Last year, the ECB asked the company to raise much as 500 million euros ($560 million) as part of its strategic recovery plan. It’s notable, nonetheless, that the lender has found plenty of takers despite all the well-known risks around the Greek banking system.Piraeus has raised 400 million euros from the 10-year subordinated security, with an issuer call option after five years. The very high 9.75% coupon was clearly attractive to buyers, but it carries danger signs too. Paying that much interest to bondholders will be a heavy burden for the bank’s business to support.Indeed, this might be a deal too far for wiser investment heads (regardless of all the hedge funds piling in here). Just because government yields are plunging doesn’t mean credit risk is improving; it usually means the opposite. In fairness, this issue is for bank capital specialists only but there’s always a deal that corrects the market’s over-enthusiasm for the diciest assets.The offer would have been unthinkable a year ago, and comes courtesy of a sustained decline in Greek sovereign yields, with five-year yields falling below their Italian equivalents, and a sixfold rally in Piraeus Bank's share price since February. It helps that imminent national elections are expected to deliver victory to the pro-business New Democracy Party. For Piraeus, it makes sense to strike now and the books were more than twice covered.Still, a big leap of faith is required to believe that that this ultra-high risk, CCC-rated junk bond will be repaid at that call date in five years time. Investors won’t want a repeat of what happened when Italy’s Banca Monte dei Paschi di Siena SpA issued a similar bond in January 2018. That now trades at close to half its initial value. Piraeus’s non-performing loans make up more than half of its total lending, despite its offloading of 500 million euros of them to private equity buyers this month. Even after the share price rally, the stock only trades at a price-to-book ratio of less than 0.2. The path to easing the bad debt burden will be arduous.As part of Piraeus’s strategic plan, the bank sees non-performing loans dropping to about 9% of the total by 2023, which requires the elimination of 21 billion euros of exposure. It has signed an agreement with Intrum AB, a Swedish debt collection specialist, to help manage its bad debt pile. However, the speed at which Greece’s lenders will be able to clean up their loan books is uncertain. The government and the Greek central bank have two separate, not entirely complementary, initiatives to help banks do this but they’re still obtaining European Union approvals.Piraeus’s plan to improve its fee income by 33% by 2023 looks ambitious too. As the biggest private lender to SMEs in Greece, its growth is tied ultimately to the country’s nascent economic recovery. A shareholder group that includes the EU-backed Hellenic Financial Stability Fund – as well as John Paulson, Vanguard, Blackrock Inc. and Schroders Plc – offers some reassurance. While success would be another important milestone in Greece’s long road to recovery, you’ll have needed nerves of steel to jump on this one.To contact the authors of this story: Marcus Ashworth at firstname.lastname@example.orgElisa Martinuzzi at email@example.comTo contact the editor responsible for this story: James Boxell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Marcus Ashworth is a Bloomberg Opinion columnist covering European markets. He spent three decades in the banking industry, most recently as chief markets strategist at Haitong Securities in London.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Italy's state owned Monte dei Paschi could merge with lenders of similar size although the list of candidates is thin, Chief Executive Marco Morelli said on Monday. "In theory Monte dei Paschi could be a merger partner for many banks, but the actual list (of candidates) is narrow", Morelli told Italian daily Il Resto del Carlino. The CEO added that another option was for the Italian Treasury, which owns a 68% stake following a bailout in 2017, to gradually reduce its stake.
Monte dei Paschi di Siena on Thursday reported an 85 percent drop in first-quarter net profit hurt by shrinking revenues and larger writedowns on problem loans due to Italy's weak economy, as well as some one-off hits. Monte dei Paschi was bailed out by the state in 2017 and CEO Marco Morelli is working to turn the bank around to comply with restructuring commitments agreed with European Union competition authorities and make it attractive for a potential buyer. Under the bank's 8 billion euro bailout, which handed Rome 68 percent of the world's oldest lender, Italy must submit an exit strategy to Brussels by the end of this year and bankers say turnaround efforts must bear fruit for a buyer to emerge.
ROME/MILAN (Reuters) - Troubled Italian bank Carige could need a larger-than-expected cash injection of at least 700 million euros (£607 million) under a rescue plan put forward by U.S. asset manager BlackRock, two sources familiar with the matter said. Temporary administrators appointed by the European Central Bank to run Carige are trying to find a buyer for Italy's 10th-largest bank by mid-May, after its top shareholder derailed an industry-financed rescue by blocking a 400 million euro cash call in December. A specialist fund run by BlackRock is the only known potential bidder although Italy's government stands ready to step in should a private buyer fail to clinch a deal.
SIENA, Italy (Reuters) - State-controlled Italian lender Monte dei Paschi di Siena always keeps in mind the potential for tie-ups with other banks, Chief Executive Marco Morelli said on Thursday. Speaking ...
VERONA, Italy (Reuters) - Italy's third biggest lender, Banco BPM, could be interested in tie-ups with banks close to its home turf in the north of the country, its CEO said on Saturday in comments that ...
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The European Central Bank in January launched an audit on Banca Monte dei Paschi di Siena to assess and manage the Italian lender's operating and legal risks, according to the bank's annual report. The audit on the Tuscan bank, which was bailed out by the Italian government in 2017 with a precautionary recapitalisation of 5.4 billion euros (4.6 billion pounds), is still ongoing, the report added.
European Union judges ruled on Tuesday that Italy's rescue plan for an ailing bank five years ago was legal, prompting calls for compensation for savers who subsequently faced stricter terms because Brussels had rigidly interpreted the bloc's rules. In a blow to EU antitrust regulators, the judges annulled a European Commission decision that rejected the Italian plan for Tercas and forced Rome to recoup financial aid to the bank. After the dispute with Brussels over the rescue of Tercas, Italian authorities intervened to help four other small banks in 2015 and then saved larger Banca Monte dei Paschi di Siena and two smaller north-eastern Italian banks in 2017.
Announcement: Moody's announces completion of a periodic review of ratings of Banca Monte dei Paschi di Siena S.p.A. Paris, March 13, 2019 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Banca Monte dei Paschi di Siena S.p.A. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.
Banca Monte dei Paschi di Siena S.p.A.'s (BIT:BMPS) released its most recent earnings update in December 2018, which indicated that the company finally turned profitable after losses on average overRead More...
The recapitalisation of Germany's NordLB bank should be investigated by the European Commission as it likely involved state aid that might have violated European Union rules, two EU lawmakers said on Tuesday. The lender, which has been struggling for years due to its exposure to the crisis-hit shipping industry, said in February that the German regional state of Lower Saxony and Saxony Anhalt had decided to go ahead with a recapitalisation, also backed by German savings banks. The intervention of the two states, which together own 65 percent of NordLB, effectively sidelined a rival offer by private equity groups Cerberus and Centrebridge.
Rome has suffered a long series of banking scandals, so it’s only fair to ask for more accountability. The coalition has nominated Paolo Savona, European Affairs minister, as the new chairman of Consob, the financial market regulator. At the same time, Rome has blocked a decision on renewing the term of Luigi Federico Signorini, deputy director general at the Bank of Italy.
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