The world’s oldest bank struggles on

A rights issue has thrown the world's oldest bank a lifeline.

The world's oldest bank is set to live a while longer. Italy's Monte dei Paschi di Siena, founded in 1472, has agreed a rights issue of up to €3bn, larger than its market capitalisation, in the latest stage of its battle to avoid nationalisation.

The bank has been struggling to meet a capital shortfall resulting from the ill-timed takeover of local rival Antonveneta in 2008 and bad loans resulting from the Italian recession, which have led to almost €8bn in losses over the past two years.

The non-profit foundation that currently controls the bank is expected to sell its stake as part of the capital raising.

What the commentators said

Fears about capital adequacy may take a brief break, but next year's Asset Quality Review by the European Central Bank could raise more doubts about the quality of its loan book.

On the plus side, the bank has managed to stay out of state control, something that looked unlikely not long ago, said Neil Unmack on Breakingviews. Long-standing investors will gain little comfort; they have been almost wiped out. But for others, it could be "a cheap option on a still-elusive Italian recovery".

Recommended

The world’s hottest housing markets are faltering – is the UK next?
House prices

The world’s hottest housing markets are faltering – is the UK next?

As interest rates rise, house prices in the world’s most overpriced markets are starting to fall. The UK’s turn will come, says John Stepek. But will …
23 May 2022
The end of the era of optimisation
Global Economy

The end of the era of optimisation

A focus on maximising returns has made economies too fragile, says Edward Chancellor.
23 May 2022
Barry Norris: we’re already in the 1970s. Here’s how to invest
Investment strategy

Barry Norris: we’re already in the 1970s. Here’s how to invest

Merryn talks to Barry Norris of Argonaut capital about the parallels between now and the 1970s; the transition to “green” energy; and the one sector w…
19 May 2022
High inflation will fade – here’s why
Inflation

High inflation will fade – here’s why

Many people expect high inflation to persist for a long time. But that might not be true, says Max King. Inflation may fall faster than expected – and…
13 May 2022

Most Popular

Everything is collapsing at once – here’s what to do about it
Investment strategy

Everything is collapsing at once – here’s what to do about it

Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect th…
23 May 2022
Imperial Brands has an 8.3% yield – but what’s the catch?
Share tips

Imperial Brands has an 8.3% yield – but what’s the catch?

Tobacco company Imperial Brands boasts an impressive dividend yield, and the shares look cheap. But investors should beware, says Rupert Hargreaves. H…
20 May 2022
Three high-quality FTSE 100 shares going cheap
Share tips

Three high-quality FTSE 100 shares going cheap

As stockmarkets continue to fall, bargains are starting to appear, says Rupert Hargreaves. Here, he picks three high-quality FTSE 100 shares that are …
23 May 2022