As we warned last week when the BMPS fraud story broke, this is highly likely to be the canary in the Italian banking system coalmine; and sure enough today, Reuters reports that:
- ITALIAN PROSECUTORS INVESTIGATING MONTE PASCHI, BNL, UNICREDIT, INTESA SAN PAOLO
AND CREDEM - JUDICIAL SOURCE
Italian bank stocks (still under short-selling bans) are plunging (and the EUR is dropping) but, as Reuters notes, the winner in this growing debacle is Berlusconi as Italians blame the Democratic Party for the problems at the banks. Most pollsters, however, still think it unlikely that Berlusconi can overtake Bersani with little more than three weeks to go - after being more than 15 points behind in early December. And just as a reminder Mario Draghi was running the Bank of Italy during this era of evasion.
Today in Italian Banks...
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and YTD...
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Charts: Bloomberg