Italys Monte dei Paschis shares have tumbled 15% in early trading. 9.10am GMT Monte de Paschi the main stress test casualty as authorities take a sceptical line on those loans they've been rolling over since 1472. 9.08am GMT The relief rally has reached Greece:Athens market up 1.5% at 0900 GMT, banks up 3.2%, following better-than-expected #stresstest results for Greek banks. | #euro #Greece 9.07am GMT Monte dei Paschi di Siena can trace its origins back to 1472 -- 20 years before Columbus spied the New World on the horizon.Analysts say the bank has been dogged by a series of strategic misstepsin particular its 2007 purchase of Banca Antonveneta for 9 billionas well as interference by local politicians in Tuscany and shortsighted management by its majority shareholder, a Siena-based charitable foundation.In March 2009, the bank turned to the Italian government for a cash infusion of 1.9 billion. In 2013 it went back for an additional 2.2 billion. Since then, problems at the bank compelled the foundation to sell down its stake to about 2%; new management at the bank has overhauled its strategy and shed assets. 9.02am GMT Italian banks, which failed the EBA stress tests, are sliding rapidly Banca Carige down 18%, Monte Paschi Siena down 15% 8.54am GMT Roberto Henriques, European credit analyst at JPMorgan, reckons the stress tests were rigorous enough: It does meet the credibility test. 8.53am GMT Should we be relieved, or worried, that only 25 European banks failed yesterdays examination, with just 14 still needing extra capital?Kit Juckes of Société Générale reckons you can view it either way: Doctor Daghi gave the European banking system a reasonably clean bill of health, the ECB observing only that a smallish number of banks have to raise a modest amount of capital. Its either a reassuring or a naive picture of the banking system, depending on how you want to read it. Our equity analysts conclude that this is good news for bank stocks on the whole, while from a macro point of view it was largely a non-event that allows us to move on to bigger issues. 8.43am GMT Banking analyst Sandy Chen reckons Lloyds Banking Group could struggle to pass the UKs own, tougher, stress tests, which are due in December.A particular driver behind a weaker result would be a bigger modelled fall in UK house prices... e.g. 19% in the EBA stress scenario, versus the 34% potential fall in the house price index that was set out in the BOEs April 2014 stress test guidelines. 8.32am GMT Shares in a second Italian bank, Carige Bank, have also slumped this morning, down 17%.Carige, which is the largest bank in Liguria, is expected to raise at least 500m through a rights issue after European authorities found an 810m capital shortfall in its books.Trading in Banca Carige suspended after shares opened down 17% after EBA #stresstests failed the Italian bank 8.28am GMT Austrian lender Raiffeisens shares have also surged, by 7.3%, after passing the stress tests. 8.24am GMT Another sign of relief -- shares in Austrian bank Erste Group have jumped by 7.5%. 8.23am GMT 8.21am GMT Italys Monte Dei Paschis shares are being hammered in early trading in Milan after it became the most high-profile casualty of the bank tests.Trading in the worlds oldest bank has just been temporarily suspended after they slumped by 15% in a rush of early selling.BMPS -15.00% (HALTED)raising the question of once again how much more money must be pumped into this bottomless pit of a bank that has had to raise extra capital each of the last three years. 8.11am GMT Most bank shares are rallying this morning, pushing the Eurostoxx Banking Index up by 1.7%.It tracks all the main banks across Europe, 8.10am GMT Shares in Germanys Commerzbank have surged by almost 9%, over in Frankfurt.Commerzbank opens up 9pct after stress test pass. 8.05am GMT The FTSE 100 has rallied 50 points at the start of trading, up 0.79% at 6439.Mike van Dulken, head of research at Accendo Markets, says:sentiment is being buoyed by the European bank Stress test results. 7.58am GMT Good morning, and welcome to our rolling coverage of the financial markets, the world economy, the eurozone and business.Theres mild relief in Europe this morning after yesterdays stress tests of the regions banks showed up fewer problems than feared.Eurostoxx50 futures up 1% now after ECB stress testsA slightly 'Gung-ho!' stance to earning season on both sides of the pond may trigger positive opening for Europe. FTSE +20, DAX +30, CAC +19The bank was one of nine Italian banks deemed to have failed the stress tests carried out by the European Banking Authority, which published its findings on Sunday and concluded 24 banks out of 123 it had tested across the European Union needed more capital.Monte dei Paschi di Siena, which is already in the midst of a restructuing exercise, said it had been penalised by the methodology used by the regulators and appointed UBS and Citigroup to advise it of its options and explore all strategic alternatives for the bank.Banca Monte Paschi, the main casualty of the ECB stress tests, called to open down 15% Continue reading...
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