Abracadabra

How does a bank improve its capital position without raising new capital or selling assets at a profit? That is what Banca Popolare Italiana has just done by selling stakes worth E1bn in subsidiaries to Deutsche Bank, Dresdner and a private equity firm whose shareholders include Emilio Gnutti, one of its investors. The answer is: it’s quite simple. What’s more surprising is that BPI was able to find investors to buy the shares. The first thing to understand is that the move hasn’t necessarily in...