LEAKED: Who Profits the Most from Italy’s Banking Crisis?

• LEAKED: Who Profits the Most from Italy’s Banking Crisis?
  by Wolf Richter, http://wolfstreet.com/  
  JP Morgan’s deal “would be great for Italy”: CEO Jamie Dimon.
  Bank bailouts are a big profitable business. And the collapsing Italian bank Monte dei Paschi di Siena – whose stock is nearly worthless (€0.25), and which was “rescued” twice by investors since 2014, and which now must get an even larger “rescue” or else – has turned into fee nirvana for investment banks, particularly JP Morgan.
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  Monte dei Paschi was the worst performer in the EBA’s stress test. Under the adverse scenario, its Tier 1 capital ratio plunged into the negative (-2.4%), meaning that its capital would be more than wiped out.
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  Now there’s another rescue deal in the works, this one far larger than the prior two that have failed so elegantly to solve the bank’s problems. It involves a consortium of banks, led by JP Morgan, according to CEO Jamie Dimon, and in a secondary role, by Italian investment bank Mediobanca. Monte dei Paschi seeks to raise €5 billion in new capital and sell €9.2 billion in bad loans at a deep discount to get them off its books. And the underwriting fees are going to be extraordinarily juicy.
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  “Three sources involved in the deal” told Reuters that the banks would extract €250 million in underwriting fees from the equity portion of the deal (raising €5 billion).
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  read more.

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