the italian banks are in terrible shape. NPL are at an all time high and most have lost more than 50% of their share value YTD. Despite this being against EU rules, I foresee a tax payer bailout and thus, im looking to start to buy deep OTM calls on some of the largest banks (unicredit, intesa, etc). Thoughts?
iv been looking at this for a while now. there are serious systematic issues in Italy.
imo tough times are ahead. i would wait a bit longer before buying
Interesting, Interactive Brokers actually has Borsa Italiana stocks, options, financial statements, etc.
Well, I put these guys on my LoserWatch list for fun. But I’m so skeptical on Southern Europe, there would have to be some angle (dead cheap, too big to fail protection, etc). I know zero about these guys or their situation.
italian banking system is really screwed up. like i said its a systematic issue.
the 5bil fund is not going to do anything to solve any problem.
if i had to guess the financial insitutions are 30-40% worse than they appear.
NPLs are getting better actually and there are some loan growth. It will take sometime before we see meaningful reduction in NPLs and increase in capital buffer. Bailout is a real possiblity which will make those stocks go parabolic, another option is asset sales which also has its negatives.
NPLs are high coz of the legal system. It takes 10yrs to go through the courts so banks have to keep on them on balance sheet for that amount of time.
there are new processes being put in place which expediate the judicial system which will see NPLs decline. On the credit side i’m neg on italian banks, but there could be some upside on equity.
Totally agree…
+1
Do the Italian banks have English financials? I’d be interested in taking a look at banking abroad. But honestly investing in distressed banks is a bit of a gamble. Without the ability to actually look at that loan portfolio, it is really hard to know with any certainity what will happen. The best you can do is find management teams that you trust
these guys give no f*ks at all.
youre lucky if they pick up the phone or answer your email, and if they actually do make sure you have a good translator close by.
i was recently trying to get a copy of a loan doc and it literally took 2 whole weeks.
Bwahaha, that’s what’s happened when I called the Chinese about some of my A-share questions. “Sorry guy, we no give no f*cks at all, we care Chinese, you go away now”.
^^ indeed, and for those of you counting on a bail out don’t hold your breath. The EU has a “bail in” rule. Holders of bank bonds would take the hit… not taxpayers. Works great when the bonds are spread out though institutional investors. Unfortunantly for Italy, a bulk is held by retail investors. There could be a loophole where they get around the EU rule by the governent reimbursing the retail investors who take a hit on the the bonds (thereby putting it back on the taxpayers)… but it is a mess. Last time there was a “bail in” bail out… some retail investor committted suicide.