Bloomberg News

Italian Regulator Extends Short-Selling Ban on Banks to Feb. 24

January 12, 2012

Jan. 12 (Bloomberg) -- Italy’s securities regulator extended a ban on short selling financial shares until Feb. 24, according to an e-mailed statement from Commissione Nazionale per le Società e la Borsa.

The restrictions, in place since August, prohibit investors from betting against the shares and equity derivatives of banks and insurance companies, Rome-based Consob said yesterday.

The short-selling ban covers securities such as UniCredit SpA, which has plunged 40 percent in 2012 and slumped to a record low this week. Regulators in France, Spain, Italy and Belgium imposed temporary bans on the bearish bets in August to stabilize markets amid Europe’s sovereign-debt crisis.

“The risk is that they’re not allowing investors to get a clear signal about which of these stocks are healthy and which ones are sickly,” Kevin Byrnes, a West Chester, Pennsylvania- based analyst at TFS Capital LLC, said in a phone interview. “That can clog up the price discovery for the entire Italian stock market.”

UniCredit, Italy’s biggest bank, slumped this year after announcing a rights offering meant to bolster its capital. Intesa Sanpaolo SpA and Banca Monte dei Paschi di Siena SpA, the nation’s second- and third-biggest lenders, retreated 32 percent and 65 percent, respectively, last year as the European debt crisis spread to Italy, the region’s third-largest economy.

While Italy’s 40-stock FTSE MIB stock index lost 25 percent in 2011, its loss was 1.2 percent through year-end after the short-selling ban was announced on Aug. 11. The Bloomberg Europe Banks & Financial Services Index fell 32 percent and 6.9 percent, respectively, in the same periods.

--With assistance from Chiara Vasarri in Rome. Editors: Nick Baker, Joanna Ossinger

To contact the reporter on this story: Nikolaj Gammeltoft in New York at ngammeltoft@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net


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