Italian Banks' Sovereign Debt Link Evokes Doom Loop Memories
- Fluctuating bond prices playing havoc with capital levels
- Italian banks far more of their state debt than European peers
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The ups and downs of Italian government bonds are making the country’s banks queasy.
UniCredit SpA and its smaller competitors are seeing their financial resilience being eroded after government bond values declined. The country’s banks hold by far the most state debt among lenders in Europe and with yields moving in reaction to politicians’ declarations, it’s not hard to see more risk ahead.