GENOA, Italy (Reuters) – A deepening recession and banking stress tests could find Italy’s mid-sized lenders short of billions of euros, putting the state on the hook for a new wave of cash calls and triggering an overhaul of how they do business.

Even ahead of the European stress tests, expected to take place when or shortly before the European Central Bank (ECB) takes over direct supervision of euro zone banks next year, Italy’s smaller banks are under pressure to boost their balance sheets after a Bank of Italy audit of problematic loans and to meet stricter Basel 3 capital rules. Bad loans in Italy have been climbing at an annual rate of 20 percent in recent months.

GENOA, Italy, May 16 (Reuters) – A deepening recession and
banking stress tests could find Italy’s mid-sized lenders short
of billions of euros, putting the state on the hook for a new
wave of cash calls and triggering an overhaul of how they do
business.

Even ahead of the European stress tests, expected to take
place when or shortly before the European Central Bank (ECB)
takes over direct supervision of euro zone banks next year,
Italy’s smaller banks are under pressure to boost their balance
sheets after a Bank of Italy audit of problematic loans and to
meet stricter Basel 3 capital rules. Bad loans in Italy have
been climbing at an annual rate of 20 percent in recent months.

MILAN (Reuters) – Banca Monte dei Paschi di Siena (BMPS.MI: Quote, Profile, Research, Stock Buzz) pared losses, improved asset quality and stemmed outflows in the first quarter, the first signs of the Italian bank’s recovery from a high-profile derivatives scandal.

Italy’s third-largest bank by assets reported a net loss of 100 million euros ($130 million) on Wednesday, less than analysts were expecting and a substantial reduction on the 1.6 billion euro loss in the last quarter of 2012.

MILAN, May 15 (Reuters) – Banca Monte dei Paschi di Siena
contained its net loss to 100 million euros ($129.8
million) in the first quarter as it improved asset quality and
kept its direct funding broadly steady.

The results lifted the bank’s shares as analysts had
expected Monte dei Paschi to report a net loss of 156 million
euros, traders said referring to a consensus circulating on the
market.

MILAN (Reuters) – Generali (GASI.MI: Quote, Profile, Research) chief Mario Greco’s turnaround plan started to bear fruit as the Italian insurer delivered higher-than-expected earnings and improved its capital base, fuelling a near 3 percent rise in its shares.

Greco, at the helm of Europe’s biggest life insurance player since August, has pushed through an extensive clean-up of Generali’s balance sheet and is seeking 4 billion euros (3.3 billion pounds) from the sale of non-core businesses to boost capital.

MILAN, May 10 (Reuters) – Insurer Generali
rebounded from a quarterly loss at end-2012 to deliver a higher
than expected net profit in the first three months of the year,
a sign the restructuring led by its CEO is bearing fruit.

Chief Executive Mario Greco, at the helm of Europe’s biggest
life insurer by premiums since August, has pushed through a
clean-up of Generali’s balance sheet and is selling non-core
businesses in a bid to strengthen the company’s capital base.

MILAN, May 9 (Reuters) – Italy’s Mediobanca was
dragged into the red in the quarter through March, hit by
losses deriving from its large stake in insurer Generali
and shrinking margins due to the deteriorating Italian
economic backdrop.

Yet Mediobanca, the first Italian bank to report quarterly
results, was able to further improve its capital ratios, among
the strongest in the domestic banking sector, and continued to
cut costs.