Problems for the world's oldest bank
As a result of the weekend's results, Italy's Monte dei Paschi di Siena, the world's oldest bank which was bailed out by the Italian government in 2012, came out with the largest capital shortfall of any of the 123 covered by the stress tests. It now has to raise 2.1 billion euros ($2.7 billion) within nine months. In trading Monday morning, MPS shares had fallen 15 percent as a result of the tests.
Banca Carige presents the next biggest shortfall in Italy, with a further 814 million euros needed.
Banca d'Italia, Italy's central bank, seemed reasonably confident following the results, partly because the worst-case scenario involved a five-year recession, which they thought was improbable. Fabio Panetta, the bank's deputy governor, described the findings as "reassuring" and "not unexpected."
This is partly because seven of the nine banks have already raised money or sold off assets to correct the capital shortfalls (the ECB tests are based on their balance sheets as of the end of 2013). They are: Banco Popolare, Banca Popolare dell'Emilia Romagna, Banca Popolare di Sondrio, Veneto Banca, Credito Valtellines, Banca Popolare di Milano and Banca Popolare di Vicenza.