Why Italy’s bank crisis could be a ‘ticking time bomb’

Just as the dust begins to settle on Brexit, Italy’s banking system looms as the next threat to global financial markets.

Previous attempts to resolve Italy’s banking sector woes have proven to be less than effective. Non Performing Loans on the balance sheets of Italian banks represent over 8% of the total loan portfolios. However some analyst fear that this is set to grow to a whopping 15% in the near future.

Results of a stress tests by the European Banking Authority due on July 29 are expected to shed more light on the capital needs of the Italian banking sector, potentially serving as a spark to renewed financial turmoil.

While foreign exposure to Italian banks is relatively low, the bigger worry is that a backlash over a bailout leads voters to revolt, empowering the euroskeptic 5 Star Movement, a political party that is growing in poularity, which has called for a referendum on eurozone membership.

Could we be moving from Brexit to Italeave?

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