“Recent tensions, which are heavily reflected on stock prices, requiring decisive action, which give quickly a trend reversal signal, and possible support measures.” Word of the Governor of the Bank of Italy, Ignazio Visco, who spoke to the assembly of ABI. Direct reference to Monte dei Paschi di Siena.
Visco: to save the banks will use all tools
“The problem of non-performing loans of Italian banks – admitted Visco – is serious, but it can be managed; It is clearly framed and faced “and pointed out the governor,” you’re doing it, taking into account the need to balance speed and cost of operations. The reduction of their numbers recorded last autumn is an encouraging sign. ” So serious problem but not emergency for number one on Via Nazionale. “It is not correct – added Visco – talk about the problem of impaired loans as an emergency for the entire banking system.”
Weighing especially the crisis
“The loss, in the crisis years, almost ten percent of the GDP and about a quarter of industrial production – explained governor – could not seriously affect the balance sheets of Italian banks and on the quality of their loans. In the absence of double-dip recession, the gross stock of non-performing loans on loans to non-financial companies alone, more than 140 billion at the end of 2015, would have amounted to about 50 billion, an amount equal to 5 percent of the funding granted, close to that observed before of the crisis. “
Mps, near the double
For the Governor “on changes in impaired loans have dramatically affected the times – we have so far particularly long – the debt recovery procedures, for which the measures decided in the last year will lead to a significant shortening. As we have already had occasion to point out, average recovery time of less than two years just would determine, with a higher valuation of non-performing loans, a ratio of non-performing loans and loans from the distant half of what you see today.
87 billion net NPLs but 50bn guarantees covered
“excluding the writedown, the amount of suffering” of Italian banks is 87 billion “of them – made it clear governor – about 50 are secured by collateral whose value is estimated at 85 billion; the rest is secured by personal guarantees, with an estimated value of 37 billion, and is not guaranteed. ”
Visco then stated that ‘non-performing loans can be distinguished, as we use to do in Italy, at least two major categories, very different from each other for state of difficulty of debtors: 360 billion Gross impaired loans at the end of last year, 210 were related to insolvent debtors (the suffering), 150 corresponded to the probable failures or loans past due or overdue. The coverage requirements or depreciation of these two categories of impaired loans are, of course, different. Both are valued in the financial statements with the necessary prudence, but not at values corresponding to their immediate liquidation. For the second category the return of the performing loans is possible; in fact, it was significant even in the difficult conditions of the past years. It is, in fact, credit reports “live”; There are high chances that the debtor, while going through a particularly difficult phase, is able to overcome it and to return to honor their commitments.
Most of the impaired exposures – Visco explained – is concentrated in banks in good financial condition, despite the effects of long and deep recession. The banks ‘significant’ with particularly high levels of non-performing loans and, among other intermediaries, those with capital ratios (core tier 1) of less than 10 percent held in the complex at the end of last year 15 billion in loans net of write-downs already counted in the financial statements, which are also covered by collateral and guarantees.
The stress tests will not ask heritage binding requirements
The EBA stress test, although will end with a recommendation on the bank’s capital, will not result in a request for capital binding as was the case in the past. “Stress tests are hypothetical exercises,” said the Governor, processed with a static method that “deliberately neglects the measures that banks definitely would put in place during the three years considered to mitigate the negative effects of the test required shock» . Stress tests then show a more pronounced impact in countries like Italy where the economy comes out of a long recession. “It’s absolutely vital to avoid the risk that the exercise ARISING FROM procyclical effects in a fragile macroeconomic environment.”
Visco, response margins maneuver in EU rules
The EU standards, recalled in his speech the governor, provide for ‘the possibility of government intervention precautionary nature also in terms of capitalization, with reference to the results of the stress tests. ” And “the current situation, fraught with risks for financial stability, require the provision of a public backstop to be activated in case of need, in full compliance with EU standards, keeping in mind the potential systemic effects of any crisis for individual member states and for the euro area.
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Visco the argument raised by some in Europe, (the last President of the Eurogroup Dijsselbloem, ed) that government measures to support the system Italian bank should have been made in the past, as in other countries, “does not take into account the different evolution of
conditions of national banking systems over time,” because “the countries that in recent years have used the substantial public resources they have done in the face of overt banking crises, related to the high exposure to derivatives, high risk and lack of transparency, or the concentration of loans in largely overvalued property sectors. ” The situation of our system, however, as clearly shown also in the Financial Sector Assessment Program (FSAP) of the International Monetary Fund in September 2013, then it was different: Italians intermediaries were not affected by these phenomena. We have the increase in non-performing loans is mostly driven by the weakness of the real economy, which continued until the last years, in a regulatory framework in the meantime suddenly changed. ”
Visco, other mergers expected in the not long
There will soon be new mergers in the Italian banking market, said the governor. “The merger between two major banks
(between BPM and Banco Popular) is an important test of the ability to renew the
following system of reformation- process noted Visco – expected that other group initiatives have no place in a long time. ”
“It is expected that other group initiatives take place in the not-long”
The Governor Ignazio Visco during his speech at Abi
Change Unicredit premise summits to improve
the renewal of Unicredit summit, according to the governor of the Bank d ‘ Italy, “sets the stage for improving the capital position and innalzarne levels of profitability, in line with the requirements that regulators and the market demand for systemic relief groups internationally.”
Padoan, dialogue with the EU on all measures permitted
“the dialogue of the government with the European authorities is continuous on all public intervention measures permitted.” So says Economy Minister Pier Carlo Padoan assembly ABI, in reference to the banking situation. In the context ‘of a banking sector with strong fundamentals, not least in comparison with other systems-country, there are some problems and these can be resolved through market solutions. perhaps complex but possible and effective solutions. The role of the public sector in these conditions – said the minister – must be of a precautionary nature, the Government is working to make available adequate instruments if they are required. ” For Padoan “the new European regulations are very demanding, provide room for flexibility ranging exploited fully, especially in the case of systemic risk.”
Padoan, reduced by three years time debt collection
the set of measures taken in Italy for the “simplification of insolvency measures has an impact on reducing the three-year time recovery of claims.” To indicate the estimate is Economy Minister Pier Carlo Padoan. In Italy, the current estimate is seven years for the recovery of a debt, well above the European average. On the introduction of the covenant march to non-performing loans, Padoan has estimated a reduction of 40 to 7-8 months time.
Atlas joins forces with Credit foncier on Npl
Padoan, complementary to Atlas reforms undertaken
the intervention of Atlas “is complementary with reform of the banking system initiated by the government, which increase efficiency and transparency and encouraging consolidation processes. ” For the Minister of Economy, “a boost to the market for non-performing loans can be derived by the intervention of specialized private operators, and this spirit was born the fund Atlas, which can invest both in capital increases of Italian banks requested authority supervision, both in conjunction with other market investors in tranches of vehicles created to support the budgets of Italian institutions burdened by suffering and Npl. “
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