Italy's biggest bank under threat, Euro contagion spreads

1 October 2008

Shares in UniCredit were suspended in Milan this morning, as fears grow over the firm's financial stability.

The Italian bank had announced earlier that it would spin off some of its property assets into a separate fund - and saw its shares fall further prior to the suspension.

Yesterday, UniCredit stock closed 12.7 per cent down on the day and on Monday it had dropped by another ten per cent.

Concerns over liquidity have already led to government bailouts of German, Icelandic, Benelux, Franco-Belgian and British banks in recent days - as concerns over the recent events in the US have left banks more reluctant to lend to each other.

Italian regulators said yesterday that the firm's capital ratios were "adequate", however.

Alessandro Profumo, UniCredit's managing director agreed - and added that the bank is "calm" despite the current market turmoil.

Milan's flagship MIB30 exchange is down 301 points, or 1.16 per cent, so far today.

UniCredit is Italy's biggest bank.

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