The Italian Bank Run: Monte Paschi Capital Shortfall Surges 75% To €8.8Bn Due To “Rapid Liquidity Deterioration”

zerohedge.com / by Tyler Durden / Dec 26, 2016 5:50 PM

While the big news last week was that Italy’s third largest bank, Monte Paschi, had been nationalized after JPM destroyed the bank’s chances of securing a private-sector rescue, and that Italy would issue up to €20 billion in public debt to fund the bailout of this, and other insolvent Italian banks, it appears there may be more moving parts to the story.

Recall that as we warned, the biggest danger for both Monte Paschi, and Italy’s banking system in general, is that retail depositor confidence in the Siena bank is shaken enough to lead to a bank run either in the world’s oldest bank, or worse, across the entire Italian banking sector, leading to a worst case probability outcome of falling bank dominoes as bank funding needs explode, resulting in even more deposit outflows, and so on in a toxic feedback loop.

To be sure, Monte Paschi’s deposit run is hardly new, and as the bank itself admitted last week, it had already suffered roughly €14 billion in deposit outflows, or 11%, in the first nine months of the year as shown in the chart below.

READ MORE

The post The Italian Bank Run: Monte Paschi Capital Shortfall Surges 75% To €8.8Bn Due To “Rapid Liquidity Deterioration” appeared first on Silver For The People.