PIMCO: How Italy could revive troubled banks

clock
PIMCO: How Italy could revive troubled banks

It is easy to get lost in the many headlines proclaiming impending doom for Italy's banking system (especially following the 'no' vote in the constitutional referendum), or in the complex details of state aid and debt burden sharing.

But in our view, the big picture is simple. Italian banks are burdened by a large stock of bad loans (so-called non-performing loans or NPLs), which they have valued at prices higher than market participants are willing to pay. Will Italy's referendum be the latest signpost for other developed nations? In our view, to unblock the situation, the banks need to mark down the value of the loans as well as raise equity to shore up their balance sheets. Cost to revive banking sector is manageable We estimate that around €30bn-40bn of equity injections are required to bolster Italian ba...

To continue reading this article...

Join Investment Week

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Europe

The UK accounted for €4bn in net UCITS sales in April.

Monthly outflows persist across equity UCITS and AIFs in April

Improved from €42bn outflow in March

clock 27 June 2022 • 1 min read
Brian Raven, Tavistock chief executive

Tavistock revenues jump 14% amid year of acquisitions

Bought LEBC research firm

clock 27 June 2022 • 1 min read
Equity funds managed to stay in positive territory with €2.9bn of new net subscriptions

Morningstar: European fixed income funds suffer €16.5bn net outflows in May

Equity funds remained in positive territory

clock 23 June 2022 • 1 min read
Trustpilot