UniCredit tanks 7% after weak stress tests
by Sara Sjolin
A rescue deal for Banca Monte dei Paschi di Siena sent shares of the troubled lender rallying on Monday, but the wider Italian banking sector slumped after the release of mixed stress test results.
Europe’s oldest bank, BMPS SpA jumped 5.3%, posting one of the biggest gains in the Stoxx Europe 600 index.
[…] The stock’s jump came after Monte dei Paschi’s board late on Friday approved a privately backed rescue plan to unload its high level of non-performing loans and raise fresh capital in a bid to stave off a government bailout.
The bank plans to place 9.2 billion euros ($10.3 billion) of bad loans into a new vehicle and at the same time raise €5 billion to rebuild its capital cushion. However, the plan could be hard to carry out, said Michael Hewson, chief market analyst at CMC Markets.