Visco: ‘The rules on bank bailouts to be rethought “- The Messenger

from our correspondent
TURIN Abstract: Italian banks “are well capitalized, also thanks to a pressing and prudent supervision,” impaired loans “are widely covered by write-downs and guarantees.” Italy, however, should ask for the “revision, to be launched before June 2018,” the EU directive on the losses borne by the investors in the case of the banking crisis, the so-called bail-in. Legitimate action, says the number one Bank of Italy, Ignazio Visco, since the same rule “contains a clause providing for the revision.” The EU does not comment, but lets in the line: “There are no plans to change.”
THE NO BRUSSELS

The governor speaks to the audience of bankers gathered at Lingotto for Forex and tackles all the hot topics : band bank, saving the popular, macroeconomic environment, market volatility. And European rules. “A smooth transition would be preferable and less traumatic,” he says, to allow investors “to acquire full knowledge of the new system and guide their choices.” To give a further jolt they “definitely contest the public sector intervention for bank bailouts that in several countries weighed on the finances of the state, in some cases threatening its equilibrium.” It happened in Germany, Britain and France, where between 2011 and 2013 state aid triggered the fuse of speculation, thus increasing the cost of operations. So now Italy, suggests Visco, reflects the serious mistakes made by others. But it is possible to correct the course, is the exhortation addressed to Brussels, the EU lines on rehabilitation and on bank resolution (bank recovery and resolution directive, Brrd) provide for the revision and is an opportunity that “should be exploited, building experience. ” Apparently it is not the Commission’s projects, which in the evening entrusts reply to an official: “The Directive was adopted in 2014 with the consent of a majority in the European Parliament and with the unanimous agreement of the member states. For a year and a half know that the bail-in of creditors would protect taxpayers. “
 MOVE REQUIRED

Just in the scope of the new regulatory framework “considerable sacrifice for shareholders and holders of subordinated bonds was inevitable” and in the case of the four banks saved (Marche, Etruria, Savings Bank of Ferrara and Chieti ) Bank of Italy has acted “carefully and promptly in compliance with the existing rules.” Without a rescue operation, detects the governor, the alternative would be a forced liquidation “that would have lost value and generated losses for holders of bonds and unsecured,” blocked “normal banking business” and ditched the local economy. There were other possibilities, says Visco, “The settlement procedure has been initiated, in the absence of market alternatives, given the irreversible nature of the collapse and the emergence of unsustainable liquidity strains.”
 THE PARACHUTE

But in the end who has paid for the rescue of the four institutions? Not taxpayers, ensures Via Nazionale. “The costs have been supported not only by shareholders and subordinated bonds, the banking system through the newly established Fund for a resolution. There were no transfers of public resources. ” The new regime for the European banking crisis has as main objective the stability of the financial system, so the aid is provided when there is a public interest and in all other cases “of full-blown crisis, there would be an alternative to liquidation.”

 INDICATION
 The banking groups, in short, must be prepared. Visco points the way: the alternative to the resolution fund is the development of “voluntary mechanisms of action, additional to the mandatory deposit guarantee systems.” True that the economic recovery the flow of new bad debts is decreasing, but it takes time to the band bank deploys its effects and “no action can reasonably be expected to delete suddenly the mass suffering of the past must be attacked with determination banks, in a medium-term perspective. ” Non-performing loans of the banking groups have reached 360 billion, 18% of total loans, “more than half is registered in suffering and subject to procedures of partial recovery lengthy and expensive” and with the advance of the crisis vigilance “has ensured the progressive increase coverage rates: the average devaluation of the performing loans is now 45%, in line with the European average, for the suffering almost 60%, banks hold collateral for about 160 billion. ” Now there are countermeasures, but there is no parachute entirely sure. Visco warned: “No security activities, in any country, is able to clear the risk of banking crises, especially in times of severe recession.”
 Claudia Guasco