Monte Paschi Crashes To All Time Low, Rebounds After Government Agrees To Fund Bank Bailouts

Wednesday, December 21, 2016
By Paul Martin

by Tyler Durden
ZeroHedge.com
Dec 21, 2016

In early European trading, shares of Italy’s Monte Paschi halted after crashing 17%, dropping to fresh all time lows, after the bank warned its liquidity could run out far sooner than expected. But then, moments ago, its shares soared, recovering all losses when Italy’s upper house of parliament approved a government request to borrow up to €20 billion to underwrite the country’s troubled banks.

This was, however, compounded after Monte Paschi warned it expects to burn through around €11 billion euros of liquidity more quickly than previously forecast, according to a revised prospectus on the bank’s website.

The world’s oldest bank said it now expected its net liquidity position, currently standing at €10.6 billion, to turn negative after four months. This was a sharp deterioration from the most recent liquidity update just three days prior, when on Sunday the bank had forecast that a current net liquidity position would turn negative after 11 months under a number of assumptions. It said on Wednesday the position would be negative for 15 million euros on the 5th month and could worsen further to minus 740 million euros by the 12th month. This compares with the minus 100 million-euro level it forecast on Sunday for the 12th month.

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