Monte dei Paschi bank launches cash call to boost finances

pubblicato 19 dic 2016, 02:47 da Gioacchino Dell'olio

The world’s oldest bank, Monte dei Paschi di Siena, has launched a cash call on shareholders as part of its efforts to raise €5bn (£4.2bn) and avoid a taxpayer rescue.

Its shares fell 8.5% in early trading as the bank began its attempt to entice institutional and retail investors to snap up fresh shares. The offering is only one part of its strategy to bolster capital. It is also asking bondholders to swap their investment for shares, a process that must be completed by the end of the year.

Italy’s referendum on constitutional reform prompted the resignation of prime minister Matteo Renzi earlier this month, creating fresh political turmoil in the midst of Monte dei Paschi’s plan to sell shares by the end of the year.

This fuelled fears that the Italian government would have to step in to help save the country’s third biggest bank in a move that could force thousands of private investors who hold €2.1bn worth of bonds to take losses. New EU rules intended to protect taxpayers from bailing out banks mean that bondholders must take a hit before government money can be used.

The bank has become the focus of fears about the Italian banking system which is saddled with €360bn of bad debts amassed in recent years. Unicredit, Italy’s biggest bank, last week announced plans to raise €13bn in through a record-breaking share issue and axe 11% of the workforce.

The Italian government has made clear it is ready to act as backstop to MPS although last week Rome insisted the bank must be able to raise the funds through the markets.

MPS is being forced to take steps to boost its capital position after it was assessed as the weakest performing of 51 European banks subjected to stress-tests – a financial health check - in results published in July. The European Central Bank has refused to extend its deadline from the end of the month for MPS to boost its capital position.

The share offer for institutional investors closes on Thursday while retail investors have to decide whether to buy shares by Wednesday. The bank will also attempt to package up more than €20bn of troubled loans to clean up its balance sheet.

If the Italian government had to stump up cash it would constitute a “precautionary recapitalisation” because the bank holds enough capital to meet current regulatory minimums.

New Italian PM faces criticism over 'puppetmaster' Renzi

pubblicato 19 dic 2016, 02:36 da Gioacchino Dell'olio

Paolo Gentiloni, the new prime minister of Italy, has won a vote of confidence in Italy’s senate, in a move that will allow his government to formally take office amid relentless political attacks. The 62-year-old former foreign minister was backed by the upper house of the Italian parliament on Wednesday in a 169-99 vote. But, ever since he was chosen to take on the role of prime minister on Sunday, Gentiloni has faced criticism from opponents determined to ensure that he does not enjoy a political honeymoon.

He was appointed by Sergio Mattarella, Italy’s head of state, following the resignation of Matteo Renzi, the centre-left prime minister who suffered a humiliating defeat in a high-stakes constitutional referendum earlier this month. Now facing a tough populist and rightwing backlash, the new prime minister – who comes from an ancient Italian noble family – has had a shaky start.

Although Renzi, who is still the head of the Democratic party (PD), has resigned from office, his shadow looms large over the prime minister’s residence at Palazzo Chigi. For now, Renzi is still considered the favourite to represent the PD if and when early elections are called in 2017.

Gentiloni’s decision to keep almost all of Renzi’s key cabinet members and political allies in the government, including Maria Elena Boschi, the author of the failed constitutional reform, has prompted accusations by opponents in the Five Star Movement (M5S) that the government is still being controlled by Renzi and that it is illegitimate given the former prime minister’s resounding defeat.

Luigi di Maio, who could represent M5S in early elections, compared the situation unfavourably to Brexit, saying that at least when David Cameron resigned following his defeat he was not heard from again.

Beppe Grillo, the comedian and founder of the anti-establishment M5S, arrived in Rome on Wednesday to meet other party leaders to discuss their opposition strategy, including plans to stage protests against the Gentiloni government across Italy.

Gentiloni’s tenure is expected to be relatively short. His most important task will be to oversee a change in Italy’s electoral law, which will have to be passed before the next election can be called. He could also be forced to oversee a multi-billion-euro rescue of Italy’s third largest bank, Monte dei Paschi of Siena, in the event that the bank does not secure enough investors for a private recapitalisation. A rescue could happen as soon as Friday.

While Gentiloni told lawmakers this week he was keen to build on Renzi’s agenda, focused on economic issues, the danger for the Democratic party is that it is being labelled as increasingly out of touch with Italian voters.

“Renzi made a giant mistake saying he would resign if he failed the referendum, and now being perceived as the puppetmaster. Italians don’t care if he is the prime minister or not, but they care if he is the puppetmaster,” said Giovanni Orsina, a professor of Italian politics at LUISS University in Rome.

“It looks like a gigantic lie. And the fact that the composition of the government is so similar – it is still Renzi’s government in disguise. What they should try to do now is try to regain votes from the Five Star Movement, and this government, instead, is giving more votes to the Five Star Movement,” he added.

In light of growing fears in the US and Europe about the role of fake news in politics, Italian newspapers were also quick to point out that an alleged satirical news website was the source of a false political attack on the new prime minister that went viral. The website, called Libero Giornale, falsely – or satirically – quoted Gentiloni as saying that Italians had to start making “small sacrifices” and “stop whining on social media” if they wanted to become competitive. The article was shared over 10,000 times in only a few hours, according to a report in La Repubblica.

Published on: https://www.theguardian.com/world/2016/dec/14/new-italian-prime-minister-wins-vote-confidence-senate-paolo-gentiloni

Italy Economic Outlook as by November 22, 2016

pubblicato 27 nov 2016, 08:04 da Gioacchino Dell'olio   [ aggiornato in data 27 nov 2016, 08:05 ]

Italy’s third quarter GDP surprised on the upside, as the economy grew faster than expected by the markets and accelerated from the previous quarter, on the back of expanding domestic demand. Nevertheless, growth remained weak overall and there are signs that the economy could be slowing in Q4. In October, consumer confidence declined for the third consecutive month, following a downward trend that began at the beginning of the year. In the same month, the Purchasing Managers’ Index inched down, on the back of a weaker expansion in output and new orders, while economic sentiment improved. On 4 December, Italians will go to the polls to vote on the constitutional referendum promoted by Prime Minister Matteo Renzi. The outcome of the vote may decide the fate of the government.

Italy Economic Overview

Italy is the world’s ninth biggest economy. Its economic structure relies mainly on services and manufacturing. The services sector accounts for almost three quarters of total GDP and employs around 65% of the country’s total employed people. Within the service sector, the most important contributors are the wholesale, retail sales and transportation sectors. Industry accounts for a quarter of Italy’s total production and employs around 30% of the total workforce. Manufacturing is the most important sub-sector within the industry sector. The country’s manufacturing is specialized in high-quality goods and is mainly run by small- and medium-sized enterprises. Most of them are family-owned enterprises. Agriculture contributes the remaining share of total GDP and it employs around 4.0% of the total workforce. 

The country is divided into a highly-industrialized and developed northern part, where approximately 75% of the nation’s wealth is produced; and a less-developed, more agriculture-depended southern part. As a result, unemployment in the north is lower and per capita income in higher compared to the south. 

Italy suffers from political instability, economic stagnation and lack of structural reforms. Prior to the 2008 financial crisis, the country was already idling in low gear. In fact, Italy grew an average of 1.2% between 2001 and 2007. The global crisis had a deteriorating effect on the already fragile Italian economy. In 2009, the economy suffered a hefty 5.5% contraction—the strongest GDP drop in decades. Since then, Italy has shown no clear trend of recovery. In fact, in 2012 and 2013 the economy recorded contractions of 2.4% and 1.8% respectively. 

Going forward, the Italian economy faces a number of important challenges, one of which is unemployment. The unemployment rate has increased constantly in the last seven years. In 2013, it reached 12.5%, which is the highest level on record. The stubbornly high unemployment rate highlights the weaknesses of the Italian labor market and growing global competition. Another challenge is presented by the difficult status of the country’s public finances. In 2013, Italy was the second biggest debtor in the Eurozone and the fifth largest worldwide. 

Reading more on: http://www.focus-economics.com/countries/italy

Establishing a functioning marketplace for bad loans will prove a real test for Italy

pubblicato 29 gen 2013, 06:50 da Gioacchino Dell'olio   [ aggiornato in data 27 nov 2016, 08:16 ]

It is hard to beat Monte dei Paschi’s stock price as a window into what troubles investors about Italy’s banking sector. In early July, the shares of the world’s oldest bank collapsed more than 30 per cent in two days after the European Central Bank ordered the lender to cut €10bn of loans that had soured.While Italian prime minister Matteo Renzi is pushing Brussels for permission to inject more capital into a banking sector saddled with €360bn of loans which are unlikely to be repaid in full, the long-term benefits of new funds will be limited unless Italy can establish a functioning marketplace for such debt. Just €19bn of bad loans were sold last year, according to PwC.

So far, efforts to tackle the problem include Atlante, a private fund designed to backstop the sector, as well as a plan to securitise the loans with a government guarantee. These measures have failed to restore confidence, and investors and experts warn some of the hurdles Rome faces in tackling NPLs are higher than in other peripheral European countries racked by bad debts.

“The steps from the Italian government are going in the right direction, but this doesn’t stop here,” says Filippo Alloatti, an analyst at Hermes. “It’s a problem of an underperforming economy, a problem of a system that is still too bank-centric. The question is: are the Italian banks the most appropriate owner of this type of asset?”

Of the €360bn of exposures, €200bn are loans to creditors already deemed insolvent and of these €85bn are not already written down on banks’ books.

One pressing issue for buyers of loans is the nature of the collateral backing them. In Spain, much of banks’ bad debts were linked to home loans.

“At least in Spain and Ireland there was one asset class, residential real estate,” says Eoin Mullany, an analyst at Berenberg. “Generally there was a clearing price and it was quite liquid. In Italy, over 80 per cent of NPLs are non financial corporates. It’s very difficult to get a feel of what the value for that collateral is.”

The Bank of Italy said in April that half of the country’s gross bad loans — around €160bn — were covered by collateral offered up by borrowers. “With respect to bad debts, the value of the collateral exceeds the book value of the loans”, the central bank said in a report on financial stability.

More reading on : https://www.ft.com/content/fa7929fc-526c-11e6-befd-2fc0c26b3c60

Non-performing loans: new Bank of Italy survey

pubblicato 24 gen 2013, 06:04 da Gioacchino Dell'olio   [ aggiornato in data 27 nov 2016, 08:22 ]

This study presents the results of a survey carried out by the Bank of Italy in 2015 on the efficiency of credit recovery procedures undertaken by the main Italian banking groups.

The recovery rate for liquidations in the years 2011-2014 was slightly above 40 per cent, and the largest share of the recovery was obtained within the first five years from the start of the procedure. Four years after the debt restructuring began, almost two thirds are still underway. The average age of liquidations at the end of 2014 was twice that of debt restructuring and eight percentage points more of loans being restructured are collateralized than those being liquidated.

In 2014 the management of non-performing loans absorbed 2.8 per cent of banks’ operating costs, a larger share than in previous years. The study found not only differences in the systems adopted by the banks for managing non-performing loans but also differences in the amount of information available on the topics covered by the survey.

More reading in the attached document.

How big is the Italian NPL current problem?

pubblicato 24 gen 2013, 05:53 da Gioacchino Dell'olio   [ aggiornato in data 27 nov 2016, 08:27 ]

Non-performing loans vs. non-performing exposures

A lot of uncertainty right now stems from clarifying the size of the problem. The worst-performing loans in Italy are known as sofferenze, which can be broadly translated as “very bad debt.” It refers to those loans that have already defaulted. It is this category, which is currently €87 billion on a net basis,1 that the banks and government consider the stock of NPLs.

Many regulators and market participants, however, prefer to look at non-performing exposures (NPEs). As well as the stock of NPLs, this includes loans unlikely to pay in the future, or that are currently past due, but are not yet bad enough to classify as NPLsWhile transparency around loan performance could be improved, our understanding is that loans over 120 days past due are classified as NPEs at a minimum.

The question for investors – and the reason for much uncertainty today – is whether NPEs are actually NPLs, and whether the banking sector’s exposure is closer to €87 billion or €197 billion? Markets and regulators appear to be saying yes, while banks and governments are saying no. From our perspective, we think the €197 billion of net NPEs is the best place to start. Of this, around 60% is concentrated in five banks 

More readings on https://www.advisorperspectives.com/commentaries/2016/07/21/losses-on-italian-non-performing-loans-severity-and-solutions

Atlante raises €2.4bn for starting helping MPS

pubblicato 24 gen 2013, 04:43 da Gioacchino Dell'olio   [ aggiornato in data 27 nov 2016, 08:31 ]

A new fund to free Italy’s banks of bad loans will have at least €2.4bn of firepower, short of the government’s target for now but enough to deal with the immediate problems of Monte dei Paschi di Siena, the country’s embattled third-largest lender.

Italian banks and insurers have pledged at least €1.6bn in new money to Atlante 2 — as the private fund sponsored by the Italian government is called — ahead of Monday’s deadline for its first closing.

In addition to the new contributions, Atlante 2 will also be funded by at least €800m transferred from Atlante 1, a similar fund created earlier this year to help rescue two struggling Italian banks in the northeastern region of Veneto.

The amount committed so far is below an expected minimum target of about €3bn, after a group of private pension funds — which had expressed an interest in placing €500m into Atlante 2 — balked at the opportunity in recent days. However, people involved in the fundraising say that additional commitments are still likely even after the first closing of the fund, so the final amount could yet be higher.

Atlante 2 is considered key to resolving Italy’s banking troubles because it is designed to mop up the mezzanine tranches of the non-performing loan portfolio of MPS. The Tuscan lender was the worst performer in European-wide banking stress tests last Friday.

The clean-up of MPS’s troubled loans is the precursor to a €5bn capital raising by the end of the year that Italian banking executives and government officials are counting on to save it from possible collapse and state intervention.

Atlante 2 will only use €1.6bn of its money to underwrite the clean-up of MPS’s troubled loans, with the remainder to be stored for further deals that may be required to assist other troubled Italian banks.

More readings on https://www.ft.com/content/7c1d7c12-5b2b-11e6-9f70-badea1b336d4

Multi-MW Solar PV Plants: More Problem Than Solution

pubblicato 7 lug 2011, 23:47 da Gioacchino Dell'olio

Today, a large number of multi-MW solar photovoltaic (PV) power plants are being planned or installed in several countries all over the world. For several valid reasons stated below, many experts are convinced that installing such large centralized plants to utilize solar power is unnecessary, a wasteful investment and technologically inappropriate.

Given that solar energy is omnipresent, it can be harvested for power at any location. However in case of conventional power plants (hydro or thermal) they need to be developed adjacent to the energy source. This makes it necessary to transport power at great cost to places where it is required. On the contrary, with solar energy, we have a potential solution to generate power where it can be used; i.e. from mountain tops to the deep sea. Solar energy is therefore ideal for distributed power generation, thus saving line losses in transporting power at hazardously high voltages.

PV has the advantage of being truly modular. It can reach cost efficiencies with installations that are just a few kilowatts to 20 MW or even 200 MW. The cost per watt of solar power is the same as a 10 kW plant or 150 MW plant. In fact, the land cost and other soft costs make big plants more expensive. 

In reality, all multi-MW plants are basically clusters of several 500-kW plants since solar inverter capacities are limited to about 500 kW and no more. Why not have one hundred 500 kW plants instead of one giant 50 MW plant?

The biggest problem with the multi-MW solar PV plant is that it loses 12-15 percent of expensive power as it passes through a series of power transformers. PV solar inverters generate power at 400V three-phase. In large plants, this power is first boosted to 66kV or more with several power transformers and then stepped down to 400V with another string of transformers to suit consumer requirements. In addition, there is a further transmission loss of 5-7 percent in the power grid. Why suffer an avoidable 20 percent loss of expensive solar power? In sharp contrast, smaller solar plants with close proximity to their users incur no energy loss during transmission.

A major limitation of solar PV is the large space occupied per kW. Land could be used more profitably rather than being covered with solar modules. Large solar plants, often built in remote areas, can create environmental issues or conflict with agricultural land. Issues related to security and maintenance of large centralized power plants also loom large.

Finally, the last problem relates to the way power flows in the power grid and its network analysis. Huge amounts of power is always circulating at a 66kV or 132kV level in the grid. Injecting even 200 MW of power is just a tiny fraction of that. So this small addition does not bring much relief to problems like blackouts and wide fluctuations at the “high impedance” end of the grid. Feeding power at 400V will actually alleviate grid-congestion more than monster plants that, more often than not, add to the already congested transmission and distribution system. Voltage swings occur due to high impedance of the grid. Feeding solar power locally at 400V will immediately reduce network impedance and deliver stable, clean power.

In countries like India, promoting local PV solar power generation is an ideal solution due to its common blackouts and voltage swings. This is a meaningful and technically sound alternative to a large-sized solar PV power plant. It is the most effective and profitable way to redress power problems like blackouts and voltage fluctuations at the consumer end.

Governments should encourage small solar plants below 500 kW by installing solar modules on unused terraces and roofs. This will inject 400V three-phase output directly into a substation at the local end of the grid. Injecting high quality solar power in this way will immediately improve the quality of local power during day time hours, avoiding blackouts and voltage fluctuations. Loss of power during the day is the most common problem faced by farmers and industrial consumers. In fact, this is when the substation transformers tend to fail due to overheating. Injecting solar power will allow these transformers to run without heating up, thereby extending their life.

Distributed solar power would actually create new opportunities for Small and Medium Enterprise (SME) investment in solar power generation. Besides generating solar power, this also generates local employment. SMEs then ensure that the plants are maintained with great care. The most important benefit is that of productivity gain wherein the community gets clean stable power during working hours for at least 300 days each year. Forty percent of Indians do not get electrical supply at all. Imagine what would happen to the quality of life of these 400 million people if we extend off-grid solar electricity in their towns and villages. The resultant productivity gain would change the face of Indian economy. The same holds true for every other region in the world.

The sun produces its own energy by the process of nuclear fusion. But all hazards connected with nuclear energy are taken care of by the sun and 'clean energy', free from all conceivable hazards and risks. It is showered on us free of cost. Since the energy input is free, the cost of solar PV is basically the capital appropriation cost. As new technologies emerge, the cost of solar PV is dropping fast. In the near future, it will match the ever-rising cost of power from fossil fuels. Many of us believe that solar energy will ultimately prevail as the world’s prime source of energy.

The information and views expressed in this article are those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on its Web site and other publications.

50 Percent Biofuels Now Allowed in Jet Fuel

pubblicato 6 lug 2011, 00:19 da Gioacchino Dell'olio   [ aggiornato in data 6 lug 2011, 00:26 ]

New Hampshire, USA - Friday's much-anticipated release of revised international aviation fuel standards officially allows commercial airlines to a blend conventional jet fuel with up to 50 percent biofuels.The renewable fuels can be blended with conventional commercial and military jet fuel through requirements in the newly issued edition of ASTM D7566, Specification for Aviation Turbine Fuel Containing Synthesized Hydrocarbons.

The new standards could lead the fledgling aviation biofuel industry to immediately step up production.

Bioderived synthetic blending components are identical to hydrocarbons found in jet fuel, but come from vegetable oil-containing feedstocks such as algae, camelina or jatropha, or from animal fats called tallow.

Mark Rumizen, who helped lead the work to revise the specification, heads the certification-qualification group for the Commercial Aviation Alternative Fuels Initiative (CAAFI), a coalition that seeks to enhance sustainability for aviation by promoting the use of alternative jet fuels.

“The revision of D7566 reflects an industry cooperative effort to accomplish this task," said Rumizen. "Because of the great emphasis on safety when you're dealing with aviation fuel, the passage of this ballot required a collaborative and cooperative effort between the members of the aviation fuels community."

Representatives from companies across the fuel supply chain plus biofuel producers, aircraft and engine manufacturers, and regulatory agencies were involved in the specification development and revision.

Consiglio Europeo e Risparmio Energetico - pacchetto aiuti

pubblicato 26 giu 2011, 09:21 da Gioacchino Dell'olio

Non sono caduti nel vuoto gli appelli che il Consiglio europeo ha lanciato il 4 febbraio scorso e che il Consiglio energia (10 giugno), supportato dal Parlamento Europeo ha ribadito ad inizio mese affinché venisse al più presto adottata dai 27 una nuova strategia a favore del risparmio e dell’efficienza energetica in vista della scadenza dell’obiettivo secondo cui gli stati membri, al 2020, dovrebbero aver raggiunto il 20% in termini di efficienza energetica. Continuando con gli attuali standard, ha comunicato la Commissione, gli obiettivi del pacchetto 20-20-20 verranno raggiunti solo per metà, ledendo la competitività degli stati sul mercato internazionale. 

E’ partita così la conferenza indetta per annunciare la proposta di un nuovo pacchetto di misure che riescano ad ottimizzare gli interventi per il miglioramento dell’efficienza energetica.

“La nostra proposta mira a rendere più efficiente l’uso dell’energia nella nostra vita quotidiana e ad aiutare i cittadini, le autorità pubbliche e l’industria a gestire meglio il loro consumo energetico. Ciò dovrebbe anche concretizzarsi in bollette più contenute e creare un forte potenziale per nuovi posti di lavoro in tutta l’UE” ha dichiarato Günther Oettinger, commissario europeo per l’Energia. Finalmente arriva dall’alto l’obbligo per gli stati di definire target di efficienza energetica precisi, vincolanti, cosa che fino ad oggi era stata lasciata alla volontà delle amministrazioni, senza obblighi fissi.

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