By Alec Hogg
The Italian Referendum has driven another nail into the European political establishment’s coffin. The result is also very bad news for the oldest bank in the world, the five and a half century old Banca Monte dei Paschi di Siena, which carries a disproportionate share of €286-billion in bad Italian bank loans – one of the EU’s ticking time bombs.
BMPS is also among the world’s worst performing investments of the past decade. Since 2006, BMPS’s share price has fallen over 99% from €122 to just 19 cents. There may be worse to come. Its urgently required €5-billion fund raising exercise is now in jeopardy after populists triumphed in the Referendum.
Italian stagnation shows how heavily economic confidence relies on a healthy and efficiently functioning banking system. South African banks are rated among the most stable on earth. That’s why they need to be defended against potential abuse by influential crony capitalists. Finance Minister Pravin Gordhan knows this. Best that his cabinet colleagues need to come on side.
