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

Why there is still life in the energy bull market
Energy

Why there is still life in the energy bull market

A green power initiative on the Galapagos Islands demonstrates how the renewable energy transition will need to be supported by fossil fuels for some …
4 Nov 2022
The end of cheap money hits the markets
Stockmarkets

The end of cheap money hits the markets

Markets have swooned as central banks raise interest rates, leaving the era of cheap money behind.
28 Sep 2022
Investors are still in denial about inflation and interest rates
Global Economy

Investors are still in denial about inflation and interest rates

There are worrying signs that inflation is becoming embedded in the economy, but many investors are struggling to adjust to the new reality.
23 Sep 2022
Could gold be the basis for a new global currency?
Gold

Could gold be the basis for a new global currency?

Gold has always been the most reliable form of money. Now collaboration between China and Russia could lead to a new gold-backed means of exchange – g…
22 Sep 2022

Most Popular

Where will house prices go in 2023?
House prices

Where will house prices go in 2023?

We explore what could happen to house prices in 2023 as the market continues to slow down.
24 Mar 2023
Will energy prices go down in 2023?
Personal finance

Will energy prices go down in 2023?

Ofgem’s price cap is now predicted to fall below £2,000, based on average typical use, from July, for the first time since 2022. We have all the detai…
21 Mar 2023
5 top UK tech stocks
Investments

5 top UK tech stocks

The UK market has never been considered a fertile hunting ground for tech stars. But there are plenty of promising companies beyond the old economy, s…
23 Mar 2023