Won’t make the same mistake twice-Banks to offload Italian debt

With markets rallying hard, and hitting resistance levels shortly, one needs to consider what to do. We will bring a big charts section for the weekend. Meanwhile, let’s (still) pay attention to what the Italian situation might offer “us”. With fresh memories from Greece, investors do not wish to take more losses. Therefore, banks will be rather eager in selling their Italian exposure.ECB has desperately tried to hold the rates lower, but have failed to do so. According to sources, banks are looking to offload 300 billion EUR exposure of Italian debt. The qurstion is who is going to buy this. ECB, hardly….From IFR;

European banks are planning to dump more of the €300bn they own in Italian government debt, as they seek to pre-empt a worsening of the region’s debt crisis and avoid crippling writedowns – a move that could scupper the European Central Bank’s efforts to bring down soaring yields.

Still reeling from heavy losses on money they lent to Greece, lenders are keen not to make the same mistake twice.Then, under the pressure of governments and a hope that credit default swaps would protect them against heavy losses, they held on until it was too late to sell.

With the ECB providing a bid for Italian bonds that might not otherwise exist, board members at some of Europe’s largest bank say now is the time to accelerate disposals. Many are also reversing long-standing policies of buying into new Italian bond issues, denying Rome an important base of support.

Full article here.