lochaz-index wrote:Trouble brewing in Italy. Bank of Italy governor is calling for bail-in rules as prescribed by the EU to be shelved. Having experienced bank runs caused by the bail-in rules a fretful BoI is favoring bail-outs in dealing with troubled banks.
Problem is, Italy's non-performing loans are the equivalent of a fifth of its GDP. A hefty sum enough to sucker punch Europe as we know it.
With a brexit looming large, Italy will probably have to defy Brussels, institute a selective bail-out(save some and let some banks collapse) then play hard ball threatening to quit the EU.
http://www.reuters.com/a...-of-italy-idUSL8N18S1YR
So not only do Italian banks have a massive NPL overhang but they are also sitting on a disproportionate amount of sovereign debt.
This mess gets bigger and bigger. With the ECB toying with the idea of imposing restrictions on sovereign holdings it either be:
1. Raise capital in foul weather market or;
2. Offload a substantial chunk to the market at costly haircutshaircuts.
Not good either way.
http://www.bloomberg.com...italy-if-brexit-approvedThe main purpose of the stock market is to make fools of as many people as possible.