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Referendum spooks Italy's oldest bank

Monday, November 21, 2016 - 01:22

Shares in Monte dei Paschi di Siena were suspended from trading after big falls as Italian banking stocks came under renewed pressure ahead of December's constitutional referendum that could unseat the government. Sonia Legg reports.

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If evidence were needed that Italy is next up on the risk list look no further than Monte Dei Paschi. Shares in the world's oldest bank were suspended on Monday after falling more than 5 percent. Bank bonds targeted by a debt-to-equity conversion offer also fell sharply as retail investors worried about the future of Italy's third largest bank. The jitters come as a Dec 4 referendom on reform called by the prime Minister looms ever closer. (SOUNDBITE) (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "It seems that the referendum in Italy, rather than being seen as a referendum on constitutional reform, which it technically it is - many people are just seeing this as an opportunity for them to protest against the government." Renzi has vowed to resign if he doesn't win the referendum. And opinion polls are predicting he won't. (SOUNDBITE) (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "If he were to resign it would potentially open up another chapter of disarray. If we were to see more elections that we could see the far right populous party coming in and they have suggested they could have a referendum of Italy's membership of EMU (European Monetary Union), now that could be a big hiccup of course for the whole euro project." Other Italian banks are also bracing. Between them - they have 356 billion euros of bad loans on their books.

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Referendum spooks Italy's oldest bank

Monday, November 21, 2016 - 01:22