In Italy, the country’s third largest bank and the oldest operating bank in the world, Monte dei Paschi, is putting together an improbable plan to continue to operate in its current form. Its most daunting challenge, required by European regulators, is to raise €2.5 billion in new capital by next year. That is a lot to ask from a scandal-plagued bank that has already had to borrow €4.1 billion from the Italian government this year, and that no one expects to be profitable again anytime soon. The bank has been losing money from a series of bad business dealings that started in 2007, including a loss of €8 billion in the last two years. It may not be worth much more than €2 billion at this point, making a €2.5 billion stock issue somewhat far-fetched, but the bank has no choice but to attempt it. Regulators are also looking for cost-cutting and management changes.
In the U.S. and U.K., JPMorgan Chase is paying $1 billion in fines and restitution. The SEC and other regulators say the bank misled investors and regulators in connection with its disastrous swaps index trades and that it charged phantom monthly fees to credit card holders.