Bloomberg News

Italy’s Monti Says State Debts May Create Difficulties for Banks

January 07, 2012

Jan. 7 (Bloomberg) -- Italian Prime Minister Mario Monti said the “considerable” indebtedness of some countries may create difficulties for their banking systems, adding that his nation’s own financial network is “among the most robust.”

“All banking systems are sensitive to the situation of public debt markets, and that may create problems to banking systems of countries that have considerable indebtedness,” Monti said in an interview with France 24 television yesterday.

“The Italian banking system is among the most robust,” the Italian premier said. “It got involved much less than other banking systems into rather bold operations in the past years and during the financial crisis.”

Monti last month pushed through a 30 billion-euro ($38.2 billion) austerity package aimed at protecting the euro-area’s second most-indebted country from the region’s debt crisis.

UniCredit SpA yesterday fell in Milan trading, bringing its three-day decline to 37 percent, after Italy’s biggest lender priced a 7.5 billion-euro rights offer at a discount.

“The difficulties of UniCredit were mainly linked to its capital increase which met some temporary difficulties in this market environment, but the basic solidity of the Italian banking system is here,” Monti told France 24.

UniCredit Chief Executive Officer Federico Ghizzoni is cutting costs and reducing staff to strengthen the bank’s finances and boost profitability after posting a third-quarter loss of 10.6 billion euros. Fourth-quarter results will “reflect the volatility of the financial markets, following the sovereign debt crisis, and the persistence of adverse conditions within the macroeconomic context,” the bank said.

--Editors: John Deane, Emily Bowers

To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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