“N on is how in 2011, my first year as Governor of the Bank of Italy. Then we had to manage a true financial crisis due to the risk of a euro break; today we have to solve the problems of some banks and ensure that the savings of the Italians is safe, and we will. “
Ignazio Visco is the eve of a few days off after a certain year do not easy for him. It means that we can speak of a new Italy attack, but do not stray far from Rome. The markets are turbulent, and also penalize banks that have coped well with the European tests. “We must help investors differentiate,” says Visco. But it would like to clarify one point: “The economic crisis that hit after the 2011 hit Italy over the Great Depression, and this explains why from then to now we have accumulated more non-performing loans than in other European countries. Faced with a shock like that no intervention can be excluded, not even government intervention, but the growth is the real cure of this evil. ”
Because after the stress tests, continuous market pressure on banks?
” There is uncertainty on the economy, which was affected by the international risk, even geopolitical, and Europe is experiencing growth difficulties. This is reflected in the perception of a lower profitability of banks. The markets for now does not stand out with sufficient clarity the specific problems of an institution than a mainstream. Stress tests have not gone bad, but should be interpreted. Overall our banks, with the exception of MPS, have proved resilient. The Monte is a difficult period, is restructuring, and the bank stress test has been particularly severe. “
the one launched by the bank is the decisive plan for MPS?
“it is an opportunity to permanently solve the problems accumulated over time. It is a challenging plan, which takes time. Before you take the suffering out of the budget, recovering profitability without the weight of bad loans, then proceed with the capital increase. There are all prerequisites for success. Mount has proven to be able to change, is back with a profit.
Almost all Italian banks have problems with non-performing loans.
“In largely derived from the past. The crisis we have been deeper than elsewhere, and this has been compounded by the slowness of the recovery procedures of these loans. If the incidence of our sufferings would be half of the current one. “
It should be enough to solve this problem?
“the law must be enacted in the right direction, you can still improve the efficiency of the courts and I do not seem to lack the commitment to that end. The banks, however, intensify the active management of bad debts, they can no longer expect to treat them as residual assets, legal disputes. Many practices are not computerized, there are uncertainties about the presence of mortgages and the nature of the collateral lenders. By September, the banks will have to send us this information, suffering for suffering, the subject of a new, specific signaling flow ‘.
Where is that lenders can recover profit margins?
” banks are businesses, they also have to think of a new business model. With new technologies there is less need of personnel, it is necessary to continue the reduction of excessive local presence. They will have to cut costs in the short term and this will be the most difficult thing. If you will have to reduce staff need to use the best existing social safety nets and possibly also think about integrating with interventions ad hoc . “
After the stress tests should we expect in November of the new capital requirements for banks?
“Do not be so. The heads of the bank watches participating in the Basle Committee are committed to not cause a significant increase of the capital required at the time of finalizing this year, Basel 3. We have gone from 7.5 to 12.5% of ‘assets at risk in seven, eight years. I do not expect extraordinary demands, but to improve the management of troubled banks. And maybe in some cases of important aggregations to have economies of scale. “
Our Supervision something to reproach themselves?
“Someone asks provocatively, looking cases Mps and the Venetian banks , where it was the Bank of Italy. Just read the intercepts of the investigations to find out where was the Supervisory Board. In there, doing the inspections. To pull out the problems and report them to the judicial authorities. Cases of mismanagement in Italian banks have emerged thanks to the Bank of Italy. “
The European Supervisory apart from testing, does not produce too much stress?
“in Europe, in a year, we put together systems and different attitudes, but the Supervisory Board is homogeneous. Perhaps there is more attention to the identification of problems in search of solutions. But it is a fact of experience, which is also maturing, not a problem in itself. “
the Italian investors can rest easy?
“Who put the money in the bank, one way or another, should not think they are at risk. “
bondholders too?
“they too. But there is a fundamental difference between the four banks put in a resolution last November and the Monte dei Paschi. In the first case subordinated bonds have had to cope with the losses accumulated by the banks. In the case of MPS the plan does not provide for an appeal to such obligations and, anyway, it is not cover losses but to carry out a capital increase. “
is to exclude public intervention?
“Regardless of MPS I say that, however remote, it is wise to also prepare for this eventuality, although this does not mean that you will need.”
The EU puts tight constraints on public aid.
” Is there help of State justified and not justified. I think the banking system was hit by a negative externality, a deep economic crisis, and this is something that can justify government intervention. “
When were possible aid Italy has not asked for it. Was wrong?
“In the crisis, Italian banks have held up well. The IMF said that in 2013 the system was very resistant. “
he had no need of aid, then?
“There were no conditions for such a request and probably would not have got them . There was a crisis concentrated in one sector, such as real estate, that was likely to lead to bankruptcy of banks. The problem of suffering has become serious and manifest in 2013-2014 “.
When the rules were changed and foresaw the sacrifice of shareholders and bondholders.
“we have been critical on how to implement the new policy for the resolution of the banking crisis. It had to apply new tools and well defined, not the old ones in the hands of investors. Then he wanted more gradualness, but it was not so, in Europe on majority voting, and it was decided to accelerate the banking union …. “
also foresaw a common deposit insurance.
” Yes, and it is an issue that is lagging behind. Now things have changed, it is widespread in some countries the perception that there is a danger in accelerating the processes of the Union, and that before the introduction of the common deposit guarantees necessary to reduce the risks, put in place public debts, decrease the weight of government securities in bank portfolios, and so on. “
the recovery is slow, and there is the feeling of a country still struggling. And so?
“True. We have a GDP which is still 8% lower than in 2008, the lower consumption by 5%. Now there are signs of recovery, albeit a slow one. Employment grows more than previously thought. The Jobs Act and tax relief worked: it was a good reform, but we can not think of making a reform in a while. We have to live in a process of continuous structural reforms, large, to make it easier to do business. They need incentives, more closeness to those who want to take risks. And a broad understanding of the challenges we face, probably in Europe, not just Italian. On terrorism, immigration, and also on the public budget, the only answer can be European. The monetary policy of the ECB works, but alone is not enough for growth “.
the government would still like to take advantage of an expansionary budgetary flexibility to maneuver. Is austerity the cause of our ills?
“Every year we go to market with 400 billion securities. The debt is very high, were made several maneuvers not for austerity love, but to make it sustainable. I expect that the indication of a drop in the ratio of debt to GDP is maintained. You can and must reverse the trend that has led to its increase. Serve public investment, private and European, but on that front is difficult to move decisively. “
Germany hampers Europe?
” we say to Germany, Germany says Italy. But it is not, you can not reduce the difficulties of the euro area to the characteristics of each country. There is no doubt, however, that the German trade surplus is higher than it is allowed by the rules. “
the President of the Bundesbank, Jens Weidmann, underlines the risk that low rates ending up in time to subdue the monetary policy to the budget, ie the governments.
“Weidmann argues that if you keep rates low for too long, the countries benefiting from them could find themselves in trouble when they increase. But when we get out of a regime of low nominal rates will be because we will have brought inflation in line with the objective of price stability. And if real interest rates were to rise it will mean that the economy is good, the growth would be higher and the problems related to our debt, as a result, minors’ .
4 August 2016 (modified August 5, 2016 | 07:43)
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