Italian Prime Minister Matteo Renzi resigned late on Sunday night, after the country voted against his proposed constitutional reforms in a national referendum.
According to a final vote count, the ‘No’ campaign won 59.1 percent of the vote, with ‘Yes’ taking just 40.9 percent. In an emotional speech given after the results had been finalised, Renzi thanked his wife Agnese and his children before saying that his “experience of government ends here”.
“I take full responsibility for the defeat,” he said in the televised address, adding that he would hand in his formal resignation to Italian President Sergio Mattarella on Monday.
Renzi entered power in 2014 and quickly became known as the “demolition man”, after vowing to break down the country’s excessive bureaucracy. The constitutional reforms were designed to cut the powers of one of the parliamentary chambers and centralise power in Rome, cutting the time it takes for legislation to be passed in the country.
Italian banking shares have been hit by the result, trading down between 5 and 6 percent at market open on Monday. Several big Italian banks are in the midst of rescue plans, the progress of which will likely be slowed by a change of government.
In a note to clients, Morgan Stanley said state aid at Banca Monte dei Paschi looked increasingly likely adding that the “No” vote made it more difficult for Italy’s third-largest bank to find an anchor investor.
The euro also fell sharply against the dollar after Renzi’s speech to the nation, after Italian Prime Minister Matteo Renzi suffered a heavy defeat in Sunday’s referendum. At one stage the euro hit its lowest level since March 2015, at $1.0507. It has since rebounded, trading down around 1 percent from Friday’s close.
Italy’s cost of borrowing also rose, as expected by analysts ahead of the referendum result. The country’s 10-year government bond yield was up from 1.896 percent at the end of last week to 2.0516 percent. .