Italian banking shares have come under pressure after the planned listing of regional lender Popolare di Vicenza flopped and the latest government measures aimed at tackling the sector’s bad loans fell short of expectations.
The stock market in Milan said it could not allow Popolare di Vicenza to list after investors bought just 7.7% of its €1.5 bn share issue.
Italy’s eighth-largest bank, which needs the money to fill a capital gap and avert the risk of being wound down, will be 99.3% owned by a newly created bank rescue fund that underwrote the cash call.
The Atlante fund raised €4.25 bn from Italy’s leading financial institutions, at the lower end of a €4-6 bn range initially targeted. More than a third of the fund’s resources will be tied up in a single bank.
Shares in banks UBI Banca, Banco Popolare, Popolare di Milano and Monte dei Paschi di Siena and UniCredit fell by 5-7%.
In a sign of a growing political backlash over Italy’s banking problems, a group of small investors who had their savings wiped out in last year’s rescue of four lenders heckled the prime minister in his home city of Florence.
Some shouted “Buffoon!” and “Thieves!” at Matteo Renzi, lamenting that only some of the bondholders who lost money would be reimbursed.
Italian bank shares have lost nearly a third of their value this year due to concerns about €360 bn of bad debts accumulated during a three-year recession, while negative interest rates are also eroding bank profits.
Investors fear that banks may be forced to raise more capital to be able to offload their bad debts.
In an attempt to boost the market value of bad debts, the government announced new measures on Friday aimed at speeding up repossession – which in Italy can take up to eight years, four times longer than the European average.
Renzi said the recovery time of overdue debts would be reduced to a minimum of seven months, but investors reacted with scepticism as the decree mostly applies to new loans.
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