Trading in Unicredit shares suspended as investors digest bank stress tests

Jake Cordell
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Shares in Unicredit fell eight per cent on the back of EBA stress test results
Shares in Unicredit fell eight per cent on the back of EBA stress test results (Source: Getty)

Shares in Italian bank Unicredit were suspended from trading this morning as the lender plunged by eight per cent following the publication of stress test results on Friday evening.

Its counterpart Monte dei Paschi, which came bottom of the results but managed to secure new terms on a potential bailout, climbed four per cent in the first day of trading since the details of the closely-watched stress tests were released.

Of the 51 banks subject to the European Banking Authority (EBA)'s scrutiny, Unicredit came out sixth worst, just below UK-based Barclays.

Although the EBA did not assess banks on a pass/fail basis, Monte dei Paschi was the only organisation which would have eroded its entire capital base in the event of a financial downturn.

Read more: Bad news expected from UK banks this week

Shares popped 10 per cent at the open after the announcement a €5bn (£4.2bn) rescue package for Monte dei Paschi on Friday. The news helped overshadow the widely-expected stress test results and seems to have settled the nerves of investors.

Italian politicians have been wrangling with both the private sector and Brussels over the terms of a bailout for the country's battered banks, which are thought to have around €360bn in bad debt, or non-performing loans.

The broadest measure of the performance of lenders in the Eurozone's financial system, the Eurostoxx banks index, was down 2.9 per cent in lunchtime trading, after slowly drifting down all morning as investors sunk their teeth into the results.

In the rest of the Eurozone, Deutsche Bank, which has particularly struggled to refresh its business model for the low interest rate environment, fell two per cent to €11.77 a share.

In the UK, Royal Bank of Scotland (RBS) was told to up its game, while Barclays was also found to have pretty weak capital buffers.

RBS dropped 2.7 per cent to 187p. Barclays also slid 2.7 per cent to 150p, while Lloyds was broadly flat.

Marcus Evans, a partner at KPMG, said: "The stress test confirms stronger capitalisation across the sector, yet price-to-book ratios are at almost unprecedented lows. There is a tension between the stress test results and the market’s view of sector strength, which has yet to be resolved."

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