Risk Mood Turns Sour After Italian Banks Unicredit And Intesa Sanpaolo Suspended Following Plunge

Tyler Durden's picture

There has been a decidedly bearish turn to risk sentiment in Europe, where the EURUSD briefly touched over 1.43 just under two hours ago, only to see virtually all the gains from the Greece "bailout acceptance" non-news wiped out, and dipping by over 100 pips in the span of a little over an hour. The reason for this dramatic change in mood is attributed to a trading halt in Italian banks UniCredit and Intesa Sanpaolo both of which tumbled by 8% earlier before being halted. Among the reasons for the plunge cited by traders are rumors for a cap increase for UniCredit due to risk of not passing the stress test. There is also speculation that there was a major selling program advertised by Goldman several minute before the Moody's headlines of putting Italian banks on downgrade review. Attached is Reuters take. Bottom line - Europe is so jittery that no matter how the Greek hole is plugged, the law of connected vessels merely will mean that vigilantes will next focus their attention to one of the next two dominoes: Spain and Italy.

From Reuters:

European shares pared gains on Friday as traders pointed to a suspension of trade of Italian banking stocks.

By 1028 GMT, the FTSEurofirst 300 .FTEU3 index of top European shares was up 0.6 percent at 1,082.12 points after trading as high as 1,088.79 earlier.

Trading in shares of UniCredit (CRDI.MI) and Intesa Sanpaolo (ISP.MI) was halted. After trade resumption UniCredit fell 3 percent and Intesa Sanpaolo lost 2.3 percent.

And from Bloomberg:

UniCredit SpA (UCG) and Intesa Sanpaolo SpA (ISP) shares slumped in Milan after a review of lenders’ credit ratings sparked concern the European debt crisis may spread.

UniCredit, Italy’s biggest lender, led the decline, tumbling as much as 8.9 percent by 12:48 p.m. Intesa Sanpaolo, the country’s second-biggest lender by assets, slid as much as 7.2 percent. Both stocks were briefly suspended.

Moody’s Investors Service said yesterday it may downgrade 13 Italian banks because they would be vulnerable were the government’s credit rating to be cut. The ratings company said last week Italy’s credit ratings may be cut because of slowing economic growth and the potential for the sovereign crisis to drive the country’s borrowing costs higher.

“The downgrade by Moody’s may be furthered to encompass the long-term debt,” said Thomas Laschetti, a trader at Tullett Prebon Ltd. in London. “That is enough to create the right environment for deleveraging exposure to the sector.”

Unione di Banche Italiane ScpA (UBI), Italy’s fourth-biggest bank, today fell as much as 5 percent to 3.628 euros, below the price of the shares it’s selling in a 1 billion-euro ($1.4 billion) rights offering due to be completed today.

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chump666's picture

I hear ya ZH...greece ain't forgotten awaiting that first molotov

entendance's picture

Italy The Invisible Elephant, since 2008.
Wed Feb 02, 2011 11:58 am

chump666's picture

Short sell that french midget

Paralympic Equity's picture

I will just re-post one pearl from todays news:

ECB's Noyer says banks understand very well they must participate voluntarily to Greece bailout

This is a great example of free market policy

f16hoser's picture

Not to worry, Germans' love PIGS!

doomandbloom's picture

"Italy is not Spain"...tshirts to be printed

PaperBear's picture

Flip a coin to determine whose debt goes sour next: Italy or Spain.
Containing contagion ? It's working a charm, not.

A Man without Qualities's picture

Volatility in European stocks and futures since last evening has been insane. Some suggestions this was algo driven, but all you need is a decent Italian bank rumor to create panic.

My guess, after kicking oil down yesterday, the central planners were feeling pretty pleased they were able to use the Greek story, plus Chinese Premiere's article in the FT to smash equities higher.

Truth is, there is zero underlying conviction, so it's time to sell all rallies, but don't be greedy, they're getting desperate so any and all excuses will be used to sweep shorts.

milanitaly's picture

We will pay more taxes. We can't do more than this.

Paralympic Equity's picture

I agree, you can't pay more taxes, but a lot of italian citizens could start to pay any...

I undestand in some italian cities you pay taxex just for being alive.

I terroni le pagano le tasse?

youngman's picture

We have not been talking about Spain and Italy because we wanted to get done with the little guys first....but they wont let us finish them off....what a joke yesterday was...a "committment" to do "something" is what the market rallied on.....when you finally cut Zorba´s pension in half..and he likes it....then we have finished....I do not think we are there yet...and he won´t like it...This truly "kicking the can" or better yet..."passing the buck" to the next guy or politician....I am going to assume they know what they have to do...I hope they are that smart..but are just scared shitless in doing so..a typical politician..

oogs66's picture

they will barely talk about ireland and portugal.  somehow the media has grasped at the straw that there is no contagion risk if greece doesn't default.  that is so wrong.  and our stocks rally.  european credit in particular is flat this morning so it is shrugging off the news that should impact it most directly!  insane that stocks here want to do well

Cdad's picture

European indexes coming off their highs now.  Might have something to do with more horrible US economic data on deck...T-29 minutes.

Firing Pin's picture

Just as the Lehman "melt-down" was a scare tactic by Goldman et al to get Congress to bail out the banker's underwater positions in AIG, etc. (and to drive Goldman's competitor out of business), what is the real reason for this European financail "restructuring?"

At the end of the day, the bankers are here to rip people off, so why are they shrieking that Europe is imploding...what is their angle? What do they want to be bailed out of or what do they want to buy for pennies on the dollar? Any ideas?

oogs66's picture

The markets that should be most affected by the 3pm news that sent stocks here soaring, seem to be getting the least benefit. European credit blows, and people finally seeing that it will hit the banks.

M.B. Drapier's picture

Back in 2007, Unicredit had a liquidity problem at its Irish subsidiary.

jackbooted gauleiter's picture

Unicredit had an Irish subsidiary?

scratch_and_sniff's picture

sweet pips, roll on gdp and durable goods, and maybe a run back up to 1.43.(rubs hands)

dcb's picture

OK, haven't we seen the script enough. the resst of the world sells off, the us buys on the dip, runs it up to a higher high, does this for two days suckerng people into the rally only to have a big sell off on the end of the third day. those controlling the markets know the drill and they have trade 24/7. the retail investor is left holding the bag, on a huge drop day while the boys have gone short overnight. they buy at the dip, then ride the "two, three days up". if we have a down friday it will be one of the very few. it almost never happens.

dcb's picture

it is so annoying. the europeans can almost always bet that the us folks will buy, and hence can trade based on us stupidity and hft we will ramp up the futures, so they can buy earlier, and make a prot selling into strength. I always wonder why this keeps happening, and the only reason is hft as far as I am concerned

dcb's picture

we can almost always bet on closing our shorts on the open of each day, and buying shorts at the close of each day, you need a very fast finger to do this with multiple securites, but it's always the us that is always buying. the plunge protection team clearly doesn't have to worry about their trading losses, but we are sure giving a lot of money to the euopean traders. maybe that's the plan so they need less of a bail out.

Mussolim's picture

Meanwhile our army is "LITTERALY" resorting to the last pair of underwear....



I'm speachless, and hopless, and pantyless....

Eireann go Brach's picture

Mama Mia, welcome to the party!

hedgey's picture

Interesting. As a depositor in two subsidiary banks of Greek(NBG) and Italian(Unicredit) owners, I've had to go in to talk to the management of both this week to get a sense of which way the wind  blows... both of the subsidiaries are strong profit earners for the owners, whose troubles at home are a reflection of the fundamental defects of the Euro from inception.  If you peek under the hood, both these banks are as strongly capitalized and managed as any in Europe.  For what that's worth. 

Watching the takedown in gold today(just about to slide under 1500USD for the first time since?) after a record high earlier week result, I have finally begun to sense that the so called summer doldrums of the PM market are about to be cancelled this year...to be replaced by fireworks the likes of which have not been seen before in our lifetimes. Even physical is no longer going to be a rational trade unless you have nerves of steel and a vault of equal construction.  We're all sitting on dynamite now, and the fuse has been lit. Banks could fold like dominoes any time from now on. 

We've gone beyond the stage of MOPE...reality has aped science fiction to the point where the planet of the humanoids is a shocking B movie release directed by polyamorous gibbons with a taste for the macabre and sardonic that even DSK could not satisfy.

What's next? For the first time I can honestly say, I don't even want to know!  

AldoHux_IV's picture

Must be why we have a consortium of representatives from the house going over to Italy and other parts of europe to vacation-- I mean inspect the Italian banks on our tax dollars-- must be worth the lavish hotelxs, meals, security, tours, etc. They're bringing wives/significant others so at least the probability of a maid being raped is low, but I wouldn't rule it out.