Tag Archives: European Central Bank

Italy will continue to advance with sales of Monte dei Paschi under Draghi – sources | Instant News

ROME (Reuters) – Italian Prime Minister Mario Draghi’s new government aims to tackle troubled bank Monte dei Paschi by pushing a plan to re-privatize its losing lenders, said sources close to the matter.

FILE PHOTOS: People seen inside the bank of Monte dei Paschi in Siena in Rome, Italy August 16, 2018. REUTERS / Max Rossi

Rome spent 5.4 billion euros ($ 6.6 billion) in 2017 to rescue Tuscan banks, leaving the state with a 64% stake. MPS now needs another 2.5 billion euros to rebuild its capital reserves.

A sale would stop the MPS from becoming a permanent taxpayer drain and would allow Italy to fulfill its commitments to the European Union made at the time of the bailout.

With Italy’s change of government, there is speculation that Draghi, the former head of the European Central Bank, could use his cachet with European authorities to buy more time and delay the sale of MPS.

But a source briefed on the government’s plans said both Draghi and Economy Minister Daniele Franco intend to continue working to seal a merger deal for MPS with stronger rivals.

The prime minister’s office declined to comment.

Finding MPS buyers has proven difficult despite the ample incentives from the Ministry of Finance to sweeten the deal.

Italy has negotiated the sale of MPS to UniCredit but a change at the helm of Italy’s second-largest bank has halted talks.

New UniCredit CEO Andrea Orcel, who started his job after mid-April, may prefer other options in Italy’s consolidated banking sector, sources said.

With the sales prospect fading in the near future, MPS auditors have expressed concern about the bank’s financial future, said three people with knowledge of the matter.

The MPS is working to ensure auditors sign off on its accounts, a formality required for Thursday’s board meeting, the people said.

MPS declined to comment.

Annual losses at Tuscan banks jumped more than 60% to 1.7 billion euros last year.

Reported by Giuseppe Fonte in Rome and Valentina Za in Milan. Edited by Jane Merriman


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FACTBOX-Key policy points in PM Draghi’s inaugural address in Italy to the Senate | Instant News

(Added Factbox tag to title, details on tax reform)

ROME, February 17 (Reuters) – Italy’s new prime minister, Mario Draghi, announced his policy program in his inaugural address to the upper house Senate on Wednesday ahead of the mandatory confirmation vote he hopes he can comfortably win.

Here are some of the key policy pledges in key areas:

Vaccination / HEALTH

Draghi said the vaccine should be administered “at all available centers, public and private,” utilizing the army, civil protection agencies and large numbers of volunteers.

More broadly, he pledged to reform the health system by strengthening local hospitals and grassroots public health services. Technological advances have also allowed a greater role for remote care of patients in their homes, he said.


Italy’s Recovery Plan, which must be completed by the end of April to get around 200 billion euros in EU funding, will be overseen by the Ministry of Economy. While the broad goals will be the same as the draft prepared by the previous administration, Draghi promised to be strengthened in detail.

Its main strategic objectives are the production of renewable energy, tackling pollution, and upgrading of high-speed rail, electricity transportation, hydrogen production and distribution, digitization, broadband internet and 5G.

Whether Italy uses all available loans in the Recovery Fund will depend on the state of its public finances.


Draghi promised an overhaul of the overall tax system, saying it was “not a good idea to change the taxes one by one.” He promised “major changes to income tax” that would gradually reduce overhaul tax pressure while ensuring that tax rates increase according to income levels.


Draghi said the government intends to “quickly” return to face-to-face teaching for all students, perhaps using a different schedule than the traditional one. It will also aim to make up for hours lost during school closures due to the pandemic, particularly in the impoverished southern part of Italy where distance schools have been less successful.

He said the government would invest more in teacher training, with “special attention” on technical colleges needed to meet digitalization and environmental challenges.

He said tax reform “should be entrusted to experts,” citing a positive example followed in 2008 by Denmark, which set up a special tax specialist commission to draft such reforms for submission to parliament.


Draghi emphasized his government’s pro-EU identity.

“Supporting this government means agreeing to an irreversible euro option, it means agreeing to the prospect of an increasingly close EU integration that will reach a shared budget that can sustain countries in times of recession,” he said.


Draghi said the government would act on the European Commission’s call to speed up its civilian justice system by reforming bankruptcy laws, simplifying procedures, hiring more staff and “by working to fight corruption”.

Extensive public administration reform “cannot be delayed,” Draghi said. The buildup caused by the coronavirus crisis must be resolved urgently, computerization is expanded, personnel are better trained, and recruitment procedures speed up and be made more efficient.

* For full highlights, click (Reporting by Gavin Jones and Angelo Amante Editing by Gareth Jones)


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UPDATE 1-Draghi effect to drive up the Italian financial markets – Morgan Stanley | Instant News

(Add quote, details, background)

LONDON, Feb. 17 (Reuters) – Mario Draghi’s appointment as prime minister of Italy will provide a big boost to the country’s financial markets, Morgan Stanley said on Wednesday, predicting a big increase in the spread of closely watched sovereign bonds and double-digit performance. by its stock market.

Draghi, a former head of the European Central Bank who feasted on the Italian media as a national savior, pledged sweeping reforms to help rebuild Italy in a speech to the Senate on Wednesday ahead of a mandatory vote of confidence in his national unity government.

Morgan Stanley said the halo effect would narrow the BTP bond spread – a premium investor demand for holding Italian government bonds rather than AAA rated German debt – to 85 basis points in June from the current 90 bps spread. In the optimistic case it could drop to 55 bps before the end of the year.

For stocks, the bank expects Italy’s MSCI index to outperform MSCI EMU by 10-15% led by banks. Stocks with an overweight rating include: Unicredit, Mediobanca, ENEL, Stellantis and Prysmian.

“PM Draghi’s government is a significant positive catalyst for Italian equities, which are trading near record low valuations versus EMU,” said Morgan Stanley analysts.

The long-suffering European banking sector could do better.

Increasing perceptions around Italy could be matched by the expected economic recovery from the COVID-19 pandemic, Morgan Stanley said, adding that a performance of more than 30% was “absurd”.

The MSCI European stock index is currently trading at a discount to the World Index of All Countries excluding the United States for the first time since 2013.

“Draghi’s appointment could spark renewed interest in the region from global investors, as was the case around (Emmanuel) Macron’s election victory in France in 2017,” said Morgan Stanley.

Reporting by Marc Jones; Edited by Tom Arnold and Gareth Jones


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Draghi formed the new Italian government, appointed politicians, technocrats as ministers | Instant News

ROME, February 12 (Reuters) – Mario Draghi, former head of the European Central Bank, confirmed on Friday that he is ready to form the next Italian government and launch a cabinet with a mix of technocrats and politicians from his broad coalition.

President Sergio Mattarella asked Draghi to become prime minister after a party dispute overthrew the previous government, and gave him the task of dealing with the coronavirus health crisis and economic crash.

After a week of consultations, nearly all of the major parties from across the political spectrum pledged their support to Draghi, and prominent figures from these groups were appointed ministers.

Luigi Di Maio, leader of the 5-Star Movement, will remain foreign minister, while Giancarlo Giorgetti, a senior figure of the Liga party, will be industry minister. Andrea Orlando, from the center-left Democratic Party, will become minister of labor.

However, several important posts fell to non-affiliated technocrats, including Daniele Franco, director general of the Bank of Italy, who was appointed minister of economics and Roberto Cingolani, physicist and IT expert, who was given a new role as minister of green. transition. (Reporting by Crispian Balmer, editing by Gavin Jones)


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German consumer prices will exceed this year’s ECB target -Weidmann | Instant News

BERLIN, February 12 (Reuters) – Higher taxes at the end of this year will push inflation in Germany far beyond the European Central Bank’s target of below but close to 2%, said Bundesbank head Jens Weidmann in remarks published on Friday.

Weidmann, in an interview with the newspaper Augsburger Allgemeine, cited a reduction in value added tax (VAT) that expired at the end of last year and a tax on greenhouse gas emissions that took effect on January 1.

“From today’s perspective, the (EU) aligned consumer price index in Germany will rise above 3% by the end of the year,” Weidmann said. “One thing is clear: the inflation rate will not be as low as last year on a permanent basis.”

German consumer prices, adjusted for comparison with inflation data from other EU countries, rose 1.6% year-on-year last month after dropping 0.7% in December.

A short forecast earlier this month showed that consumer prices in the 19 countries that share the euro rose 0.2% month-on-month in January for a year-on-year jump of 0.9%.

Analysts expect prices in Germany to rise if Europe’s largest economy begins to lift the lockdown measures in place since November to contain a second wave of the coronavirus.

The European Central Bank (ECB) has missed its inflation target for years despite extremely low interest rates and bought hundreds of billions of euros of government bonds to inject liquidity into the banking system.

Weidmann, who also sits on the ECB Governing Council, said if inflation rises, the central bank must act accordingly.

“If the price outlook calls for it, monetary policy should tighten the rules,” he told Augsburger Allgemeine. “Right now, it’s about fighting the consequences of a pandemic. So monetary policy has become more expansionary. “(Reporting by Joseph Nasr; Editing by Sam Holmes)


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