Monday, 26 June: Two and a half weeks after the UK general election, the “will they, won’t they?” story of the Conservatives and Theresa May reaching a deal with the Democratic Unionist Party/Arlene Foster finally reached its conclusion. It’s been an uneasy 17 days for the Conservative leader after she lost her party’s majority in the June 8th election, but hands were shook this morning as May looks to work with the DUP “to work together in the interest of the whole UK… as we embark on our departure from the EU”. The DUP will support May’s minority government in key votes in Parliament, agreeing to back the Conservatives’ tax and spending proposals as well as supporting them on all Brexit legislations; in return receiving an extra £1bn funding for Northern Ireland over the next 2 years. May has also agreed to raise pensions annually by at least 2.5%, while also keeping winter fuel payments for the elderly. Together, the two parties have 327 of the 650 available seats in Parliament.
Italy’s banking stocks rallied in Monday’s trade as optimism flowed in to the sector as two Italian Banks have been rescued by the Italian government. It is Italy’s biggest bank rescue on record, and as much as €17bn could be pledged. Intesa Sanpaolo (italy’s biggest retail bank) will take on the “good assets” of the failed Banca Popolare di Vicenza and Veneto Bance, including the banks’ branches and employees, designed to avoid a potential run on deposits. The bailout by the Italian government has been approved by the European Commission and avoids potentially tougher bailout conditions under European rules.
European indices closed the day higher, with the FTSE MIB in Italy closing +0.81%. The CAC and DAX closed +0.56% and 0.34% respectively, while in the UK the FTSE 100 closed +0.31%.
The UK’s biggest health food retailer Holland & Barrett is to be bought by a Russian billionaire for £1.8bn. H&B, which has more than 1,300 stores worldwide, is currently owned by US private equity firm Carlyle, but is set to be bought by L1 Retails, a fund controlled by Mikhail Fridman. The deal is expected to go through in September. Elsewhere, the Co-op Bank has said it is no longer up for sale as it continues talk with existing investors over a recapitalisation, with the bank claiming to be in “advanced discussions”, and should the discussions go ahead, the bank would be able to continue as a standalone entity.