The massive restructuring of European banks will be positive in the end, the head of Italy’s main stock exchange told CNBC, on the day that Italian lender Banca Monte dei Paschi unveiled its new turnaround plan. However, Raffaele Jerusalmi, CEO of Borsa Italiana, also warned that the financial industry needed to strike the right balance between restructuring and regulation. “In general, what is happening in terms of the restructuring that we are seeing in the banking sector all over Europe is going to be positive in the end,” he told CNBC. “But there is still a risk of over-regulation we have to be careful. Last month, a report by the region’s banking regulator, the European Banking Authority, said Europe’s largest banks will need to find an extra 70.4 billion euros ($95 billion) of capital to comply with the rules. Monte Paschi announced plans to repay around 3 billion euros of its state bailout next year, with full payment by 2017, according to Reuters. The bank expects the EU Commission to approve the restructuring by mid-November, and hopes it will be enough to secure approval for much-needed state aid, after the euro zone crisis brought it close to collapse. Although Monte Paschi’s announcement came after the European market close, the news that its board was meeting to finalize the restructuring plan was enough to send shares rallying. Stock of Monte Paschi closed around 6.3 percent higher and was the top gainer on the Euro Stoxx 600 . Follow us on Twitter: @CNBCWorld
Why Europe’s PIIGS are flying
Yet, it’s always darkest before the dawn. Greece is now on track to produce a “primary surplus” a budget surplus this year before interest payments. Gross domestic product (GDP) in the second quarter expanded for the first time in four years. That means that instead of shrinking 4.2%, the Greek economy will only contract 3.8% in 2013. Unemployment has also dropped recently, albeit only by a hair’s breadth. Greece’s Economic Sentiment Index (ESI) also climbed in September to the highest level in two years. Most importantly, Greece has made money for investors, with the Global X FTSE Greece 20 ETF rallying 43.55% in over the past six months. Much of that has come since Sept. 1, with GREK jumping 23.92% in September and rising 6.58% this month. 1. Back during the housing boom, Spain boasted it was the “California of Europe.” It turned out it was more like Las Vegas and Phoenix, with its housing crash bringing the Spanish banking system to the brink of collapse.
Europe stocks fall; luxury-goods firms hit
The index closed out last week with an 0.7% loss. Click to Play Watch Alcoa, Boeing and BlackBerry Tomi Kilgore takes a look at which stocks traders will be watching during market action, including Alcoa, Boeing, and BlackBerry. Photo: Getty Images. Among decliners, LVMH Moet Hennessy Louis Vuitton SA /quotes/zigman/165816 FR:MC -1.06% /quotes/zigman/165816 FR:MC -1.06% fell 1.1%. In a report published Sunday , Reuters said analysts are growing increasingly concerned about the luxury groups brands and are worried these wont be able to provide alternative growth now that cash cow Louis Vuitton has fallen on tough times. A warning from Treasury Secretary Jacob Lew that Congress is playing with fire if it doesnt increase the debt ceiling in time increased investors anxiety about the U.S. budget stalemate and looming deadline to raise the countrys debt ceiling. Government shutdown: Track the latest news out of Washington /conga/story/2013/10/governmentshutdownstream.html 282136 The news that U.S. politicians have again put self-interest ahead of the greater good of the country by failing to make any progress in sorting out the budget or tackling the debt ceiling will have surprised few, said Alastair McCaig, market analyst at IG. The U.S. debt markets have remained calm, but the closer we get to the mid-October deadline, the less likely that is to remain the case, he said. One bright spot for Europe was Italy, with the FTSE MIB Italy index /quotes/zigman/1482176 XX:FTSEMIB +0.66% rising 0.7% to close at 18,425.82. Toward the close of markets on Friday, Italian stocks rallied on news a Senate panel had voted to expel former Prime Minister Silvio Berlusconi. Banks in Italy were the biggest gainers in Europe, with UniCredit SpA /quotes/zigman/7909864 IT:UCG +2.68% up 2.5% and Banca Monte dei Paschi di Siena SpA /quotes/zigman/204677 IT:BMPS +6.26% up more than 6%. The French CAC 40 index /quotes/zigman/3173214 FR:PX1 +0.03% pared a loss of around 0.7% to finish with a marginal gain at 4,165.58.