Italian Banks Tumble, Monte Paschi Plunges To Record Low After ECB Letter

• Italian Banks Tumble, Monte Paschi Plunges To Record Low After ECB Letter
  by Tyler Durden, www.zerohedge.com  
  The pain for Europe’s banks, and especially those in Italy, continues this morning following the latest news surrounding the Italian bank sector.
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  As a reminder, the Euro Stoxx Banks index was down -0.88% last week and is nearly 19% down from its pre-referendum levels. Italian Banks are at the heart of that weakness with the likes of Unicredit, Intesa, Banco Monte dei Paschi and UBI down -9.78%, -3.44%, -15.79% and -6.11% respectively last week, in the process sending Italian stocks to levels not seen since Draghi’s famous “whatever it takes” speech.
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  As we documented recently, there has been plenty in the press about possible liquidity guarantees and recaps for Italian Banks (not to mention yet another quiet Atlante-funded bailout on Friday) and it looks like this one still has plenty of room to run. Following reports that Italy was planning either a direct €40BN liquidity injection, a plan reportedly shot down by Merkel, as well as an EU cleared proposal for a €150 billion liquidity backstop, last night the FT ran a story suggesting that Italy PM Renzi is prepared to defy Brussels to inject public funds into the banking system should it come under severe systematic stress, and so break the bail-in principles of EU regulation following the upcoming European stress tests which, at least based on Italy’s panicked response, suggest many Italian banks will fail.
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