12/11/18

Italian Banks On Verge Of New Crisis After €400 Million Hole Emerges At Banca Carige



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Italian Banks On Verge Of New Crisis After €400 Million Hole Emerges At Banca Carige
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Remember the Italian "doom loop"?

Two months ago we reported that during the first Italian bond market freakout this May over the ascent of the populist due of Salvini-Di Maio to the Italian throne, Italian bank holdings of domestic government bonds rose by a record €28.4bn, more than what was seen during the peak of the European sovereign debt crisis of 2012. Visually, this is what the single biggest month of Italian bank purchases of BTPs in history looked like.

This vicious circle of Country X banks (in this case Italy) buying Country X bonds during times of stress - with the ECB's trusty backstop - had for years been Europe's dreaded sovereign bank doom loop. And, as Italy ....

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