These are stories Report on Business is following Monday, Oct. 27, 2014.
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Stressed
The world's oldest bank is in the deepest of trouble.
First, some background on Italy's Banca Monte dei Paschi di Siena.
What I've always found fascinating about this bank is its history: Formed in 1472, the year of the war between Volterra and Florence, it went on to survive nature's worst, from the 1629 plague to the 1703 Appenine quakes, only to run into crisis-era woes and government bailouts.
Today, as our European correspondent Eric Reguly reports, it is suffering from having been the worst performer in the European Banking Authority's stress tests, the results of which were released yesterday.
Those tests found the Italian bank in need of €2.1-billion in capital, leading to a plunge in its stock today that required trading to be suspended.
The bank's response to the stress test results was, in itself, interesting in that it noted the "comprehensive assessment" exercise confirmed its capital structure to be "sound and capable of absorbing the impact of the asset quality review."
The second paragraph tells investors that the bank passed the test for the "baseline scenario."
Then there's the third paragraph: "On the other hand, the adverse stress test scenario at 2016 was not passed, showing a shortfall of €2.1-billion net of actions already implemented."
The bank questioned some of the methodology but said its board, which already has been restructuring, has launched a review, and has hired Citigroup Inc. and UBS as advisers.
"The group already moved some large corporate and real estate positions to the bad loans book in [the first half of the year], making appropriate provisioning," Société Générale said in a report on the bank and the test results.
"As the capital shortfall stems from the stress test, the gap may also be filled using alternative instruments to common equity."
According to The Wall Street Journal, the Bank of Italy's deputy government said the central bank would be "more than happy" for anything that helped the troubled bank along, including a merger or takeover.
Twitter sinks
Twitter Inc. shares tumbled in after-hours action late today after the social media company posted its third-quarter results and outlook for the current quarter and the year.
Twitter's quarterly loss came in at $175.5-million (U.S.), or 29 cents a share, compared to a loss of $64.6-million or 48 cents a year earlier.
Revenue surged to $361.3-million from $168.6-million.
"We had another very strong financial quarter," chief executive officer Dick Costolo said in unveiling the results.
"I'm confident in our ability to build the largest daily audience in the world, over time, by strengthening the core, reducing barriers to consumption and building new apps and services."
Twitter also said the number of its average monthly active users climbed 23 per cent to 284 million, and that mobile accounted for some 80 per cent of the total.
Ad revenue per thousand timeline views, it added, rose 83 per cent to $1.77.
Twitter also projected fourth-quarter revenue of between $440-million and $450-million, reportedly shy of what analysts expect, full-year revenue of $1.37-billion to $1.38-billion, and 2014 adjusted EBITDA of between $260-million and $265-million.
Twitter shares were down about 9 per cent within about 20 minutes of the close.
- Twitter shares drop 9 per cent after hours
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Valeant says will go higher
Valeant Pharmaceuticals International Inc. says it's prepared to increase its takeover offer for Allergan Inc. to "at least" $200 (U.S.) per share, The Globe and Mail's Bertrand Marotte reports.
Valeant's current cash-and-stock bid is worth about $176 per share or $52.7-billion.
Chief executive officer Michael Pearson said in a letter to Allergan's board of directors today that his company's third-quarter earnings have "clearly refuted" the attacks Allergan's management continues to make, such as claiming that Valeant's business model is not sustainable.
"To be clear, Valeant is prepared to improve its offer and provide value to your shareholders of at least $200 a share," Mr. Pearson said in the letter.
Regulator says railways failing to report
Railways in Canada failed to properly report 254 accidents over a seven-year period, the Transportation Safety Board of Canada says.
The regulator said today a review of rail occurrences at three railways, including the company involved in the Lac-Mégantic disaster of 2013, found carriers failed to follow mandatory reporting requirements by notifying the watchdog of incidents late or not at all, The Globe and Mail's Eric Atkins reports.
The TSB said the majority of the accidents in question at Montreal, Maine & Atlantic, Canadian National Railway Co. and Canadian Pacific Railway Ltd. were minor, and occurred in raily ards with no injuries. But the regulator said it will consider "enforcement action" to address non-compliance.
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