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4-Traders Homepage  >  Equities  >  Italian Stock Exchange  >  UniCredit SpA       IT0004781412

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Italy's Banks Take Hit on Inconclusive Election Results

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02/26/2013 | 10:34am CET

BY Giovanni Legorano

MILAN--Italian banks are taking a huge hit at the outset of Tuesday's trading session in Milan following election results that produced a hung parliament with no clear political majority in the upper house.

Large banks such as UniCredit SpA (>> UniCredit SpA), Intesa Sanpaolo SpA (>> Intesa Sanpaolo SpA) and Banca Monte dei Paschi di siena SpA (>> Banca Monte dei Paschi di Siena SpA) all failed to open at the beginning of the trading session.

When they did open they were trading down at levels ranging from -7% and -10%.

"Political instability is taking a toll on government bonds, which Italian financial companies are stuffed with, so they are the ones which suffer most," said Vincenzo Longo, a strategist at IG Markets in Milan.

The yield on 10-year Italian bonds surged 46 basis points to 4.82% on Tuesday, according to data from Tradeweb, after the inconclusive set of election results triggered fears of renewed political instability for the country.

With the counting of votes ending in the early hours of Tuesday, the left-wing coalition led by the Democratic Party's Pier Luigi Bersani gained a razor-thin victory in the lower house of parliament over the center-right coalition headed by Silvio Berlusconi. By leading the vote count in the lower house, the Democratic Party automatically gets the majority of seats and, therefore, is likely to receive the mandate to form a government.

However, in the Senate, although the center-left is the biggest single party after the vote, it is well short of an overall majority. Italy's parliament is made up of the Chamber of Deputies and Senate, both with equal powers.

Assicurazioni Generali SpA (>> Assicurazioni Generali SpA), Italy's largest insurer by assets which has a large government bond portfolio, was also suffering in Tuesday's trading session.

At 0901 GMT Generali was down 5.84%, UniCredit 7.8%, Monte dei Paschi 7.3% and Intesa 8.1%. Milan's FTSE MIB was down 4.1%.

Write to Giovanni Legorano at giovanni.legorano@dowjones.com

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Financials (€)
Sales 2017 20 388 M
EBIT 2017 7 916 M
Net income 2017 2 571 M
Debt 2017 -
Yield 2017 3,45%
P/E ratio 2017 8,40
P/E ratio 2018 6,69
Capi. / Sales 2017 1,37x
Capi. / Sales 2018 1,35x
Capitalization 27 952 M
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Mean consensus OUTPERFORM
Number of Analysts 21
Average target price 15,7 €
Spread / Average Target 25%
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Jean-Pierre Mustier Chief Executive Officer
Giuseppe Vita Chairman
Ranieri de Marchis Co-Chief Operating Officer
Francesco Giordano Co-Chief Operating Officer
Marina Natale Chief Financial Officer
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