Italian Banks Collapse, Short Sales Banned As Loan Loss Fears Mount

Tyler Durden's picture


Italian bank stocks are crashing (with BMPS down 40% year-to-date) as Reuters reports that investors are growing increasingly nervous about how the sector will cope with lower interest rates and a 200 billion euro ($218 billion) pile of loans that are unlikely to be repaid. The broad banking sector is down 4% with stocks suspended, and in light of this bloodbath, Italian regulators have decided in their wisdom, to ban short-selling of some bank stocks (which has driven hedgers into the CDS market, spking BMPS credit risk).

Italy's banking index was down over 4 percent with shares in several lenders, including the country's biggest retail bank Intesa Sanpaolo and the third biggest lender Banca Monte dei Paschi di Siena, suspended from trading after heavy losses.

Bloodbath for Italian financials in 2016...


But don't worry:


As Reuters reports,

Investors are growing increasingly nervous about how the sector will cope with lower interest rates and a 200 billion euro ($218 billion) pile of loans that are unlikely to be repaid.


Those concerns are trumping expectations about a wave of consolidation set to sweep the sector, with cooperative banks under pressure to merge following a government reform to reduce the number of lenders.


JP Morgan said this month Italian banks should be avoided because low rates are expected to put pressure on revenues more than in other countries and credit problems limit a recovery in provisions.


Traders have suggested exiting investments that have been particularly favoured, such as Popolare di Milano and Intesa, as the stocks have reached key supports.


"I think upside on cooperative banks this year is much more limited," said a London-based equity sales person.


Short interest in Popolare di Milano soared 50 percent to 1.1 percent in the last month, and it rose 10 percent to 3.9 percent for UBI, according to Markit data.

And now, Italian regulators have re-enforced a short-selling ban (because that has always worked so well in the past)...

Consob adopts a temporary ban on short selling on Banca MPS shares.The ban shall apply immediately and shall last until Tuesday 19 January 2016 end of day.


Consob decided to temporary prohibit short sales of the share Banca MPS (ISIN code IT0005092165).


The ban will apply immediately and will be enforce for the entire trading session of tomorrow, Tuesday 19 January 2016, on the MTA market of Borsa Italiana.


The prohibition was adopted pursuant to Article 23 of the EU Regulation on short selling, considering the price change recorded by the share on 18 January 2016 (in excess of 10%).


The prohibition applies to short sales backed by stock lending. This extended the scope of the prohibition of naked short selling, already in force for all shares from 1st November 2012 by virtue of the EU Regulation on short selling.

And so hedgers have shifted to other markets - spiking default risk across the entire group, soaring back towards pre-"whatever it takes" levels...

Get back to work Mr Draghi.

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Mon, 01/18/2016 - 13:43 | 7062086 Haole
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Mon, 01/18/2016 - 13:46 | 7062109 DownWithYogaPants
DownWithYogaPants's picture

What is "CATSO" 

I don't think you mean Connecticut Association for the Treatment of Sexual Offenders

Mon, 01/18/2016 - 13:51 | 7062131 Vinividivinci
Vinividivinci's picture

Nope...just Italian for, plain old, dick !

Mon, 01/18/2016 - 13:54 | 7062159 sam i am
sam i am's picture

This interview of Kerry’s has not been widely reported despite – or perhaps because – it casts a fascinating light on the private thoughts of the US government.

Mon, 01/18/2016 - 14:02 | 7062209 Save_America1st
Save_America1st's picture

Contagion is a bitch...that words gonna be used a lot in the coming months.  Contagion ain't just for Ebola anymore.  Debt is the Ebola of this entire world and it's going to wipe nearly everything out before it's run its course and burned itself out.

Mon, 01/18/2016 - 14:05 | 7062235 manofthenorth
manofthenorth's picture

Let 'em burn !!!

The world looks so bright in the shimmering flame light !


Mon, 01/18/2016 - 14:24 | 7062360 Boris Alatovkrap
Boris Alatovkrap's picture

Che cazzo!?

Mon, 01/18/2016 - 14:38 | 7062465 NoDebt
NoDebt's picture

It used to be if I was away from ZH for a few days- vacation, fishing trip, sex tourism in Maylaysia with underage shemales, whatever, the shit would invariably hit the fan while I was away.  Now I only leave to grab lunch for an hour and it happens.


Mon, 01/18/2016 - 15:04 | 7062680 OrangeJews
OrangeJews's picture

Fiction peddlers!!!  Everything is fine, bruh.

Mon, 01/18/2016 - 14:39 | 7062474 pods
pods's picture

Super Mario is going to have to toss Greece under the bus again, and quick.

Mon, 01/18/2016 - 14:58 | 7062639 U4 eee aaa
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Mon, 01/18/2016 - 14:07 | 7062243 Soul Glow
Soul Glow's picture

Bunga Bunga!

Mon, 01/18/2016 - 14:11 | 7062263 manofthenorth
manofthenorth's picture

" Yeah she'sflaming up good"

"smoke from all around !"

Mon, 01/18/2016 - 14:13 | 7062278 ArgentoFisico
ArgentoFisico's picture

CAZZO .. MICHIA, VERGA, SFONDAPAPERE ... Miiiiiinchia (sicilian)

Mon, 01/18/2016 - 14:16 | 7062301 ArgentoFisico
ArgentoFisico's picture

curiously for the sicilians dick is a female ... but you english speaking guys don't have "gender" in the words, what i tell you for :D

Mon, 01/18/2016 - 15:44 | 7062926 WillyGroper
WillyGroper's picture


Increasingly looking like more & more folks are missing their gender altogether.

Mon, 01/18/2016 - 14:06 | 7062236 macholatte
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Italian Banks Collapse...


We have been waiting for this for a long time... something about PIIGS.


Mon, 01/18/2016 - 14:26 | 7062373 HardlyZero
HardlyZero's picture

Maybe adding the French fresh FPIIGS.

Mon, 01/18/2016 - 15:00 | 7062654 Zorrohodge
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but seriously though, I hate that term, divisive propaganda phrase.

Mon, 01/18/2016 - 14:37 | 7062454 Beowulf55
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Interesting to note that we use to think 100's of millions was a big number.  Now it is 100's of billions and it is all hoohumm. 


My, how times change.  A we just becomes comfortable numb.


Mon, 01/18/2016 - 20:52 | 7064438 jaxville
jaxville's picture

  I once saw a barrel/tub containing one million pennies.  It has always helped in understanding the concept of a million.  Because of that I can kind of conceptualize a billion.  In pennies it would be a thousand of those barrels.  I can't really get my head around a trillion.  It's just a really big number.

Mon, 01/18/2016 - 14:13 | 7062280 Amun
Amun's picture

"Can you imagine trying to sanction them after persuading them to put in phased sanctions to bring Iran to the negotiating table, and when they have not only come to the table but they made a deal, we turn around and nix the deal and then tell them you’re going to have to obey our rules on the sanctions anyway?

That is a recipe very quickly, my friends, businesspeople here, for the American dollar to cease to be the reserve currency of the world – which is already bubbling out there…..”

Mon, 01/18/2016 - 21:56 | 7064713 Lets Buy The Dip
Lets Buy The Dip's picture

dick? yes and PAIN or MORE pain could be on the way?

 its been a stock market bloodbath recently. But these guys, i listen to in Australia, and very accurate with their calls are saying there could be a bounce before more selling. =>

At the very least, the overhang of economic slowdown makes it critical for investors to hold winners and avoid sharp losses from disappointing earnings reports. These reports are coming out this week. 

RBS and JP morgan, seem to be issuing a SHIT THE BED letter to their investor clients. Hmmmmm>?

The outlook for S&P 500 earnings is the bleakest in a while. The index is expected to post its first full-year decline in earnings per share since 2009, with a dip of 1 percent in 2015, according to S&P Capital IQ. The firm only expects three S&P 500 sectors to post positive earnings growth for the fourth quarter: telecommunications (18 percent), consumer discretionary (7.5 percent) and health care (5.6 percent). So we could be in for more pain, especially in EUROPE. 

Althought to make matters worse, everytime, these guys and everyone got BEARISH, it was a good time to BUY, you would have made out like a bandit. So maybe its not a time to FALL IN LOVE with the DOWNSIDE. I guess?

Mon, 01/18/2016 - 13:58 | 7062174 Haole
Haole's picture

What, you thought I was beckoning you inmates to act as consultants to the German army, aprising them of the sociopathic nuances of Euro-bound "migrants" and how to treat them in complete secrecy from the public?

Sorry, no release for you.

Mon, 01/18/2016 - 14:38 | 7062460 nyse
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Mon, 01/18/2016 - 18:26 | 7063787 bamawatson
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Mon, 01/18/2016 - 17:14 | 7063413 Nico72
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It is written CAZZO!!!

Mon, 01/18/2016 - 13:44 | 7062091 db51
db51's picture

Everything is awesome!

Mon, 01/18/2016 - 14:02 | 7062208 algol_dog
algol_dog's picture

Thought this was fixed in 2011?

Mon, 01/18/2016 - 15:01 | 7062662 U4 eee aaa
U4 eee aaa's picture

Does this look like 2011 to you?

Mon, 01/18/2016 - 19:43 | 7064143 Tall Tom
Tall Tom's picture

No. It looks more and more like 2008.

Mon, 01/18/2016 - 13:45 | 7062092 DownWithYogaPants
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Von Thirdenberg!

Europe?  Ouch.  They can't seem to do anything right any more. It is sad that the most enlightened race to ever walk the earth is self destructing.

Mon, 01/18/2016 - 13:45 | 7062102 Kaiser Sousa
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dont panic...

CNN told u so....

Mon, 01/18/2016 - 13:46 | 7062105 nmewn
nmewn's picture

Yet another soc...oh never mind ;-)

Mon, 01/18/2016 - 15:45 | 7062930 MrSteve
MrSteve's picture

Can you recommend an economist who'll give us the real truthful honest accurate answer about the short selling controversy here? All I know is if Momma ain't happy, ain't NObody happy! So Qui Bono, who's yur Momma?

Mon, 01/18/2016 - 13:47 | 7062113 Omega_Man
Omega_Man's picture

soon short selling will be banned everywhere... it's the right thing to do

Mon, 01/18/2016 - 13:58 | 7062183 Dr. Engali
Dr. Engali's picture

I certainly hope you're kidding.

Mon, 01/18/2016 - 13:59 | 7062190 Omega_Man
Omega_Man's picture

it should be banned... no need of it

Mon, 01/18/2016 - 14:07 | 7062229 Dr. Engali
Dr. Engali's picture

If you believe that then you're an economic illiterate. Shorts bring a lot of value to the market. A short seller digs into the fundamentals of a company. If the company has something wrong then the shorts keep them honest, if they have nothing to hide then the company has nothing to worry about. Shorts also provide liquidity for the market as they have to cover at some point in time. Remove the short seller and watch how quickly the buds evaporate when markets become stressed.

Now, what should be illegal is the artificial propping up of markets that have distorted prices over the last few years.

Mon, 01/18/2016 - 14:14 | 7062288 Omega_Man
Omega_Man's picture

that's the typical zio bs rationale 

Mon, 01/18/2016 - 14:17 | 7062307 Soul Glow
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If we can't sell how are we supossed to buy?  That is what shorting is, it's being a seller.  Would you have all markets be like China?  You can buy but you can't sell?  What kind of market do you dream of.

Mon, 01/18/2016 - 14:21 | 7062330 Dr. Engali
Dr. Engali's picture

Don't try rationalizing with an idiot. Based on his other posts it's clear the guy is a loon.

Mon, 01/18/2016 - 14:39 | 7062471 Karlus
Karlus's picture

>>Don't try rationalizing with an idiot. Based on his other posts it's clear the guy is a loon.


Yeah, I kinda learned that some time back. Problem is these people vote and reproduce. See: Anyone who watches Kardashian or was long GPRO

Mon, 01/18/2016 - 18:29 | 7063794 bamawatson
bamawatson's picture

heck, i am embarrassed; i thought the guy was dry humor tongue in cheek kidding.

certainly he is not serious

Mon, 01/18/2016 - 14:44 | 7062530 OutaTime43
OutaTime43's picture

You are selling something you don't actually OWN. There's nothing wrong with selling an acutal asset to someone else that you owned. That's different from short selling. Short selling allows asset prices to be manipulated to the downside. Well below their real intrinsic value. 

Mon, 01/18/2016 - 15:01 | 7062655 Global Hunter
Global Hunter's picture

below intrinsic value sounds like a no brainer arb to me :)

Mon, 01/18/2016 - 15:08 | 7062715 U4 eee aaa
U4 eee aaa's picture

Yes, with short selling reward is limited and risk is potentially (though not practically) unlimited so they cannot afford to misprice things. This is exactly opposite to the bull side that can get away with irrational exuberance for a long time

Mon, 01/18/2016 - 16:38 | 7063231 tenpanhandle
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Bring back the uptick rule and enforce the laws on naked short selling for the TSX-V et al.

Mon, 01/18/2016 - 15:04 | 7062678 Dr. Engali
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And only being allowed to buy allows assets to appreciate well above their intrinsic value as the last eight years of market manipulation have shown us.

Mon, 01/18/2016 - 15:09 | 7062719 U4 eee aaa
U4 eee aaa's picture

You are wrong!'s more like 20 years

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