Matteo Renzi’s replacement will inherit a fragile banking sector. Data collected by The Banker reveals the state of its biggest players

Italian prime minister Matteo Renzi’s resignation after his constitutional referendum defeat has stirred more fears for the country’s ailing banking industry.

For Monte dei Paschi (MPS), the country’s third biggest lender and the symbol of Italy’s banking crisis, the defeat jeopardised a €5bn capital injection needed to satisfy the European Central Bank (ECB) following MPS’s poor performance in the July round of stress tests. The bank asked the ECB for the deadline to be extended to January 20, but the ECB declined. There is also speculation the bank is asking the federal government for assistance, creating questions about state aid – an activity generally banned by EU rules.

Mr Renzi’s resignation has raised questions over the future of reforms he was spearheading to shore up the country’s banking sector as a whole, which is burdened by an average non-performing loan (NPL) ratio of 11.08%.

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UniCredit, the country’s only global systemically important bank, and Intesa Sanpaolo are far and away the country’s biggest banks and among its most stable. The latter is the better performer of late; in its last annual report it recorded a tier 1 capital ratio of 16.6%, return on capital of 10.62% and an NPL ratio of 9.5%. UniCredit’s capital and NPL ratios are only slightly less impressive, but its return on capital hit just 4.74%.

'Italy’s fourth and fifth biggest are Unione di Banche Italiane (UBI) and Mediobanca respectively, both of which are predominately focused on retail and small businesses. 

All data sourced from www.thebankerdatabase.com

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