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Troubled Italian bank shares slump

One of Europe's oldest lenders is banking on a five billion Euro share sale in a bid to avoid being nationalised. Monte dei Paschi di Siena is considering a share sale, yet to be approved by the bank's board. The troubled Tuscan bank needs an urgent cash injection to repay a four billion Euro government loan taken out last year.

Saxo Bank's Head of Equity Strategy, Peter Garnry, says the cash crisis for the Italian bank can be seen as good news within the context of a European Central Bank asset quality review. The bad news for the bank's shareholders does demonstrate a more transparent banking culture, in Peter's view. Half of the fifteen banks currently under the ECB review are planning to raise fresh capital, estimated to be around eight billion Euro.

Shares in the bank fell by around ten percent on Tuesday but Peter remains bullish on European banks. "Broadly for the industry, I think it's positive that you have some of these banks coming out ahead of the results of the Asset Quality Review saying 'hey we need to raise capital.".

01:25 minutes
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