Michael Noonan: No new financial crisis after Italy referendum result

Michael Noonan: No new financial crisis after Italy referendum result

The Finance Minister Michael Noonan has denied there is a new financial crisis as a result of yesterday's referendum in Italy.

Prime minister Matteo Renzi has resigned after his proposals were rejected, leading to fears of a snap general election.

Polls show any election would be won by a protest group which wants to hold a referendum on taking Italy out of the Euro.

This morning the euro reached its lowest in two years. However, Michael Noonan has said the blip has already ended.

"The markets recovered very quickly and they're back to where they were. It seems to ne now that there isn’t a financial crisis coming from the referendum in Italy," he said.

A "yes" vote would have handed powers back to Italy's regions, making the parliament's lower house - the chamber of deputies - more powerful than the senate.

But the crushing defeat for the Italian government forced Prime Minister Matteo Renzi to resign and put the country's battered banking sector firmly in the spotlight.

Analysts are fearful that Italian banks, many of which are burdened by bad debt, may now struggle to find refinancing during an ensuing period of political uncertainty.

Jane Foley, a senior FX strategist at Rabobank, said: "For Italy's banks the referendum result will mark a huge disappointment.

"A decision will be forthcoming as to whether the €5bn recapitalisation of Monte dei Paschi will go ahead. If a private recapitalisation were to fail, it is likely that the government will step in to prevent the spread of contagion."

Italian banks were in the doldrums, with UniCredit falling 3%, Intesa Sanpaolo dropping 1%, Banco Popolare down 7%, and Banca Monte dei Paschi di Siena 4% lower.

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