Recapitalization of Italy's troubled banks will be harder following the failure of a referendum pushed by Prime Minister Matteo Renzi, with ratings agencies among key actors to watch as delays may loom as the country likely heads to early polls next year.
Renzi resigned after failing to win a mandate to curb the powers of the upper house legislature, throwing into question measures including plans by Banca Monte dei Paschi di Siena to conduct a 5 billion euro ($5.3 billion) capital increase this week, a solution backed by the outgoing premier.
Barclays Economics Research, in a note to clients following the defeat, suggested that concerns surrounding Italian banks are growing.
"This outcome is likely to exacerbate concerns about the Italian banking sector and increase downgrade risks from rating agencies such as DBRS, although we do not expect rating agencies to act anytime soon, as they are likely to wait for political developments before taking any rating decision," Barclays said in the Dec. 5 note.
Italy's banking sector has struggled with toxic debts as 14 of the largest banks sit on 286 billion euros ($301.9 billion) of bad loans, debt securities and off-balance sheet items. Asset managers, insurers and banks had agreed earlier this year to set up a euro fund to bail out the weaker Italian lenders.
But other analysts suggest after the referendum result, investors might pull out.
"[Investors] are now drawing back, they think the situation is too volatile both in Italy and in the European Union," said Mark Grant, chief strategist at Hilltop Holdings, in a Squawk Box interview.
"It's going to be very difficult to do a raise of capital for Monte Paschi and the regional investment banks, and I think then what happens is Italy is going to be at loggerheads with the European Union and European Central Bank," Grant said.
He explained that under ECB and EU guidelines, shareholders and bondholders might have to take losses, and that many of those investors were Italian citizens.
Italian President Sergio Mattarella could accept Renzi's resignation and call for early elections next year, or appoint a technocrat prime minister. Either step, however, adds further pressure on the banking situation and by extension on the euro, which fell to a 20-month low against the dollar at $1.0503 after the referendum results.
Still, clarity on the political and banking situations are keenly awaited, National Australia Bank Currency Strategist Rodrigo Catril told CNBC Asia.
"We don't want to see a delay in the recapitalization [program] for Italian banks. If there is a delay, we could see more pressure on the euro," Catril explained.