ECB Takes Over Italy's 10th Largest Bank as Italy Skids Towards Recession

The majority of board members at Banca Carige, Italy’s 10th largest bank, resigned and the ECB took Over.

The European Central Bank has announced the appointment of temporary administrators and a “surveillance committee” at troubled Italian lender Banca Carige, as new data indicated the country is flirting with recession. The ECB intervention follows a failure in December by the middle-weight Genoan bank to achieve shareholder support for a €400m (£360m) bond issue.

Italian banks are still exposed to a high proportion of bad loans on their balance sheets following the financial crisis. They are also closely tied to the course of national politics in the country as they are large holders of sovereign debt, risking a so-called 'doom loop' effect.

It comes as fresh survey data from IHS Markit pointed towards a slowdown in the manufacturing sector across the currency bloc. On a national basis, Italy scored 49.2, just below the 50 mark that indicates growth. This added “to the evidence that the economy was either in or close to recession” in the second half of 2018, according to Claus Vistesen of Pantheon Macroeconomics.

Falling New Orders in Italy

Italy Key Findings

  • Production falls amid fifth successive drop in new orders
  • Slowest rise in employment for four years
  • Confidence at six-year low

France PMI Negative First Time in 27 Months

France Key Findings

  • PMI below 50.0 for the first time since September 2016
  • Fastest output contraction for 44 months
  • Solid fall in new orders

Eliot Kerr, Economist at IHS Markit, which compiles the France Manufacturing PMI® survey, said:

"The downward trajectory seen throughout Q4 continued into December, as business conditions moved into deterioration territory. The first decline since September 2016 was driven by further automotive sector weakness and the recent 'gilets jaunes' protests.

"Output stabilisation in November was short-lived as December data revealed a solid contraction in manufacturing production. Elsewhere, faster new order decline was driven by the quickest fall in new export orders for 32 months."

Global Recession Coming

It should be crystal clear to everyone that the entire global economy is on its last legs. A global recession is coming and the US will not be immune.

Italian and German banks will have immense difficulties.

Mike "Mish" Shedlock

Comments
No. 1-4
leicestersq
leicestersq

Good articles as always Mish, but you need to do something about the website. My phone wont view it, and the weaponised ads are a massive turn off. Also, the boxes with the articles jump all over the place when you load the page on a computer. Can you have a nice simple page with your stories on?

caradoc-again
caradoc-again

How many more times will the ECB have to step in, if only to help with the collapse of zombies the ECB itself helped created with NIRP and Bond Purchasing.

Sadly the zombies collapse in downturns, just when you prefer them not to. Would be better if they go to the wall when there is at least some semblance of economic positivity.

Six000mileyear
Six000mileyear

Why did the ECB take over the bank instead of the Italian Central bank? Is the rest of the Italian banking system so undercapitalized that taking on even a small insolvent bank automatically makes the rest of the system insolvent? Or is Germany trying to get its pound of flesh?

2banana
2banana

Board members resigned....?

Why not arrested?

The fraud will never stop until we see nightly perp walks of bank executives.