Today Programme
BBC Radio 4

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Chances are you will be hearing a lot more about Monte dei Paschi over the next few days.

Italy's oldest bank, and third largest lender, is desperately trying to raise €5bn ($5.3bn; £4.1bn) and sell €28bn ($30bn; £23bn) in bad loans.

Dr Paola Subacchi, an economist at Chatham House, said the bank has been a problem for "a long, long time", but the issues were largely put on hold in the run-up to the referendum.

Now that is over, there are two options: a "bail-in" from investors, but that would involve Italian households - which hold much of the bank's debt - taking a hit. Or a "bail-out" which is tricky under EU competition rules.

"It won't be a total bail-in or a total bail-out. It will be something in the middle," Dr Subacchi told the BBC's Today programme.

And economist Megan Greene, of Manulife Asset Management, warned that the risks facing Italy's banks could spread.

“If there’s contagion to other Italian banks they may have problems raising capital. And don’t forget it was only a few months ago that Deutsche Bank was on the front pages so you could see contagion spreading beyond Italy to the rest of the EU," she said.

While the European Central Bank could intervene with its asset-buying programme, she said, it had to buy assets according to the size of the economy, spending more on German and French assets than in Italy.

Read more about the day's latest business news on our live page.

The head of the Eurogroup, Dutch Finance Minister Jeroen Dijsselbloem, said that the consequences of Italy's "No" vote are not yet known after Prime Minister Matteo Renzi announced his decision to resign.

However, he emphasised that it did not change either the situation facing Italy's economy or its indebted banks.

BBC Monitoring
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The first head of state to react to Mr Renzi's resignation was French President Francois Hollande. He issued a statement expressing "every sympathy" with the Italian prime minister.

Mr Hollande added that he "respects" Mr Renzi's decision, and "hopes Italy will find the strength to overcome this situation", Le Monde newspaper reports. 

Credit ratings agency Standard and Poor's has said it does not see any immediate impact on Italy's credit rating as a result of the referendum.

S&P's current rating on the Italy is BBB- with a stable outlook  

"From the perspective of political stability and effectiveness, we believe that the proposed reform would have had potentially positive benefits," the ratings agency said.

The rejection of the reform, however, would not have an immediate and lasting impact on Italy's economy and fiscal policies, it added.

Markets in Italy opened lower on Monday, but soon recovered.

Image source, EPA

BBC Monitoring
News from around the globe

French newspapers have said that Italy faces a period of uncertainty after Mr Renzi's defeat in the constitutional referendum.

Eric Jozsef, the Rome correspondent of the left-wing Liberation, external daily, says the "rightist winds blowing through Europe" played their part, but above all Mr Renzi failed to deliver on his promise to turn the economy around: "Italy is still mired in economic crisis and unemployment, in particular in the south, which voted heavily against him".

Centre-left Le Monde, external is not alone in wondering whether it is really the end for Mr Renzi, as he has not announced his resignation of the Democratic Party, although it adds that the party has been "deeply divided" by the referendum campaign.

Conservative Le Figaro, external says markets worldwide have responded "optimistically" despite the news from Italy. "Don't panic! seems to be the watchword this morning," it says, adding that the vote was "not comparable to Brexit" in terms of impact, and the defeat of the far-right presidential candidate in Austria had "reassured investors" 

PM Matteo Renzi will hand in his resignation to President Sergio Mattarella after a final cabinet meeting on Monday.  

The president may ask him to stay on at least until parliament has passed a budget bill due later this month.

In spite of the pressure from the opposition, early elections are thought unlikely.

The BBC's Julian Miglierini reports from Rome that Finance Minister Pier Carlo Padoan is favourite to replace Mr Renzi.

Simon Jack
BBC Business Editor

Although the share price of Europe's oldest bank Monte dei Paschi is little changed this morning, that may not last if the consortium of investors planning a €5bn ($5.3bn; £4.1bn) cash injection abandon their rescue attempt amid the political vacuum opened up by Matteo Renzi's departure.

They will meet on Monday afternoon to decide their response. The bank's boss has described this plan as getting "several holes in one in a row". Golfers will know how hard that is and the wind of political risk has just picked up.

If they do decide the plan is now too risky then the government may have no choice but to nationalise the bank.

Read Simon Jack's full blog here

Image source, Reuters

Norbert Hofer's defeat in Austria's presidential vote on Sunday was a blow for Europe's populist right. But the Italian "No" was good news for Geert Wilders in the Netherlands.

France's far-right leader Marine Le Pen said Italians had "rejected the EU and Renzi. We have to hear this thirst for national liberty and protection."

But some analysts have cautioned against saying that this is part of a European-wide movement. They add that Italy has got bigger problems, namely the economy.

The EU's Economic and Financial Affairs Pierre Moscovici has said he has "full confidence in the Italian authorities to manage the situation. I’m sure they are well equipped to face the situation, Italy is a solid country on which we will rely." 

There have been growing concerns over financial stability in Italy, the eurozone's third largest economy.

In the markets, however, there were no signs of panic, as the possibility of PM Matteo Renzi's resignation had already been factored in, analysts said.

Banks remain weak and the country's debt-to-GDP ratio, at 133%, is second only to Greece's. Shares in Italian banks opened lower before recovering ground.

The BBC's Andrew Walker has more on the health of Italian banks.

Here's how cartoonist Giannelli saw Sunday's referendum in Italian daily Corriere della Sera: "Now we have a bit of a knot to untie!"

Italy's Monte dei Paschi di Siena, external has been watching the No vote nervously as it has been trying to raise 5bn euros ($5.3bn; £4.1bn) to stay afloat. It has been ordered by the European Central Bank to reduce its bad debt and was hoping to do so by selling new shares and getting some of its creditors to convert the debts they are owed into shares.

Economics expert Ferdinando Giuligano of La Repubblica daily told the BBC that the No vote could signal to investors that there is too much political instability to inject such a large sum.

“It’s possible that the banks underwriting it would pull out, we’ll know in the coming hours. The bank management and the government may have to start thinking of an alternative solution which will involve state money,” he said.

Image source, Getty Images

Political leaders across Europe are working out what the Italian vote will mean for them.

Germany's foreign minister, Frank-Walter Steinmeier, who is visiting Greece, said: "We are watching the result in Italy with concern... I think Renzi did the right thing, the necessary thing, but voters did not support him. This is not of course a state crisis, but it's a government crisis that needs to be resolved... it's not a positive message to Europe at a difficult time." 

France's economy minister, Michel Sapin, told reporters in Brussels that Italy was a "solid country" and that Mr Renzi's defeat was a domestic issue and not a rejection of the EU.

Both countries will hold elections next year and analysts say the outcome is unpredictable.

Luxembourg Foreign Minister Jean Asselborn told German news agency DPA: "Italy voted on a reform. It would be wrong to extrapolate that now to the European level. It was a domestic political argument."  

Markets in Milan have opened down almost 2%. But it is Italy's banks that are coming under closest scrutiny. Neil Wilson of ETX Capital told the BBC: "Italian banks are sliding 4-5% as they come under the most pressure, as expected." 

Monte dei Paschi - Italy's third biggest bank and oldest lender - is down 5.72%, Banca Popolare Milano is down 4.1% and Unicredit is down 4.03%.

Why are investors concerned? Several banks face problems. They are struggling with a burden of bad debt - loans that are unlikely ever to be repaid in full.  

Follow the latest market and business reaction at the BBC's business live page.

Sunday's referendum had a very high turnout: 68.48%

The "No" vote was stronger in the south and in the Veneto region, in the north-east. The Yes vote did better elsewhere in the north - in Tuscany, Emilia-Romagna and Milan. Have a look at the dark red areas on the map below, showing the strongest No-supporting areas. 

Also, according to a poll by QuorumSAS, the "No" vote was strong among young people (18-34), while "Yes" was slightly ahead among those over 55.

In 2014, Matteo Renzi became the youngest prime minister in modern Italian history. Now, at the age of 41, he is leaving office.  

Before he announced his resignation, he tweeted: "Thanks everyone, anyway. In a few minutes I'll be live at the Palazzo Chigi. Long live Italy! PS I'm coming, I'm coming".

Italians noted that these were the words he tweeted on the day his premiership began, 1,017 days ago."Arrivo, arrivo #lavoltabuona" - I'm coming, I'm coming #therighttime

Here is how some of Italian newspapers are covering the referendum result on their front pages on Monday

La Repubblica says: "Triumph for No, Renzi leaves"

"Oh NOooooo!" says  Il Tempo. "The scrapper's been scrapped."

"The constitution beats Renzi 59-41 - and he resigns," says Il Fatto Quotidiano.

Image source, AP

This was primarily a vote against Mr Renzi and his government and their plans for deep, constitutional reform. But those who stand to benefit most in Italy itself are some of the leading "No" campaigners, the anti-euro Five Star Movement and the anti-EU, anti-immigrant Northern League.

Northern League head Matteo Salvini was unequivocal before the vote. "This 'No' vote will also be a 'No' vote against the rules and regulations of Europe, which have been disastrous for Italy." He wants to pull Italy out of the euro, although recent polls suggest 71% of Italians do not.

He linked the result to Donald Trump’s victory in the US, to Russian President Vladimir Putin, and showed his support for France’s far-right presidential candidate Marine Le Pen.

Image source, EPA

The big winner of the night was the anti-establishment Five Star Movement. But who are they?

• Founded by comedian-turned-blogger Beppe Grillo in 2009; he has since taken a backseat in the party but still wields influence
• Five Star has long campaigned against corruption in Italian politics
• Launched as a protest party, it is now topping opinion polls
• It already controls two cities: Virginia Raggi is mayor of Rome and Chiara Appendino is mayor of Turin
• It is not anti-EU but wants a referendum on the euro
• It wants many nationalised companies privatised or closed, and universal income support for the poor
• Its most prominent figure now is deputy parliament speaker Luigi di Maio 

Matteo Renzi had staked his political future on his attempt to change Italy's cumbersome political system. And he was defeated.

"I lost and I say this out loud even if with a lump in my throat," he said in a late-night news conference.

Matteo Renzi came to power in February 2014 having earned the nickname Il Rottamatore ("The Scrapper"). He lasted two years and 10 months as prime minister and leaves the Palazzo Chigi still young, aged 41.

Ironically perhaps, he won the election promising widespread reform.

You can read more on Mr Renzi here.