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TEHRAN, November 05 -Italian banking shares fell on Monday, with a Goldman Sachs downgrade on Italy’s top retail bank Intesa SanPaolo (ISP.MI) outweighing its strong performance in European regulatory tests.
TEHRAN, Young Journalists Club (YJC) -Italian banking shares fell on Monday, with a Goldman Sachs downgrade on Italy’s top retail bank Intesa SanPaolo (ISP.MI) outweighing its strong performance in European regulatory tests.
A spike in Rome’s borrowing costs has thrust Italian banks into the spotlight, cutting the value of their large sovereign holdings and eroding their capital reserves.
Soaring Italian bond yields are also driving banks’ funding costs higher and making it more costly for them to offload soured debts.
Despite the heightened concerns, the four Italian banks tested by the European Banking Authority in a health check of the sector fared in line with the European average of the 48 banks surveyed under the so-called adverse scenario.
Friday’s results showed that even the worst-performing Italian bank, Banco BPM (BAMI.MI), had a core capital ratio of 6.67 percent in the adverse scenario, well above the alarm threshold of 5.5 percent.
However, traders said the market had paid closer to attention to a Goldman Sachs note that downgraded both Intesa and smaller peer BPER Banca (EMII.MI) to ‘sell’, leaving UniCredit (CRDI.MI) as the only ‘buy’ among Italian banks.
“Intesa ... is a well-managed institution with a comfortable capital position. That said, its results will be subject to a deteriorating macro outlook,” Goldman’s note of Nov. 2 said.
With a valuation in line with Dutch bank ING’s (INGA.AS) or Spain’s BBVA (BBVA.MC) and at a 50 premium to domestic rival UniCredit, Intesa’s position looks vulnerable, Goldman said.
Source:Reuters
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