A Starting Point This Year

[Nemo]

We have discussed out views and predictions of this year coming.  Here is another point to ponder.

Nemo


http://www.express.co.uk/news/uk/749360/European-banking-crisis-imminent-Monte-dei-Paschi-KPMG

EU set for CATASTROPHIC 2017: Fresh European banking crisis IMMINENT, top analyst warns
EUROPE could suffer another catastrophic banking catastrophe on a par with the 2008 financial crisis, a top analyst has warned.
By Jon Rogers, PUBLISHED: 15:38, Mon, Jan 2, 2017 | UPDATED: 16:11, Mon, Jan 2, 2017

European banks are still maintaining a large level of bad loans which has continued to hinder the banking system and could spark a new financial meltdown, according to Howard Goldring, managing director of Delmore Asset Management.

The financial world is currently closely examining the banks in Italy, in particular the oldest lender in the world, Monte dei Paschi di Siena (MPS), which was recently forced to opt for state intervention, as it tries to recapitalise and its strategy could be used as a template for other struggling Italian banks.

However, Mr Goldring also points to the fact that other European banks are in a similar position regarding bad debt, which could trigger another financial meltdown.

Mr Goldring said: “In the States, the economy hit the wall, people wrote off all the bad loans, they got on with it and the banks recapitalised and moved forward.

"This process in Europe is taking years because of refusal to face reality and I am just worried that there's going to be more of th

According to KPMG, the European banking sector has about €1.1trillion (£0.94tn) in non-performing loans, almost three times as much compared to the US.

Banor Capital fixed income portfolio manager Francesco Castelli said: "It's very difficult to solve a banking crisis just out of private capital… so finally we have a template for a solution, which is also funded by the taxpayer, which is probably not the best thing to do but sometimes it is the only thing you realistically can do.”

    This process in Europe is taking years because of refusal to face reality and I am just worried that there's going to be more of this over the next year or two, not just in Italy but in other places across Europe

    Howard Goldring, Managing Director of Delmore Asset Management

But with the ongoing political crisis in the country over the referendum vote, investors proved to be reluctant and the government was forced to step in to protect the country’s third largest lender.

Castelli said: ”There will be a bit of money lost from subordinated bondholders, which will be converted into equity, but it's probably a fair price in order to get the thing moving.”

However other banks have indicated that the situation at MPS is a drag on investor confidence throughout the sector as a whole and could set off a domino effect.

In total, the Italian government is expected to prop up its banking system to the tune of €20billion (£17.05bn).

Italy is the third largest economy in the eurozone while the government’s debt burden is one of the largest in Europe.

As a percentage of GDP it's an eye-watering 133 percent, second only to Greece in the bloc.