The bank of italy, plan the Mps is exposed to risks – Milano Finanza

The restructuring plan of Banca Monte dei Paschi di siena of Siena and the capital increases of other banks are at risk because of the volatility of the financial markets. A volatility that should reach its peak during the first week of December, coinciding with the vote on the constitutional referendum (December 4).

Is as it has emphasized today the bank of Italy in the report on financial stability, remembering that recently it was announced that the capital increase of the bank of siena also provides for a voluntary conversion into shares of instruments that are subordinated of the capital. For Via Nazionale, the restructuring plan is complex and involves different actors, even if, thanks to these operations, the ratio of loans to impaired total loans would be in line with the average of the Italian banking system.

More in general the low level of equity prices may make it more difficult for the capital increases planned (Mps and Unicredit ) and those needed to perform aggregation operations. “The fears aroused in investors from low profitability and high non-performing loans”, has put in evidence the central Bank, “are reflected on the prices of shares went down from the beginning of the year. For this reason, the general index of the Italian Stock exchange continues to suffer from the weakness of the banking sector, which the ratings of the investors on the profitability remain unfavourable. In addition, the differential between the implied volatility of the Italian market and that of the euro area is high.

In the first nine months of the year the banks have, however, relented and cancelled from the financial statements of around 6 billion of gross receivables in suffering, in the face of little more than 1.7 billion in the same period of 2015. “With these transactions, the conclusion of which is planned for the current year, the value of the sufferings transferred in the course of the entire year would exceed that of 2015 (about 8 billion),” they explained to Palazzo Koch. Among the disposals in the course of completion there is also the first securitisation transaction backed by a State guarantee (Gacs).

in Addition, in the third quarter of the year the flow of new loans, impaired fell to 2.6% of total loans, also because the policies of the credit supply of the banks remain cautious. In general, therefore, is improving the quality of bank credit, while the assets continues to increase. “Continues the rebalancing of the balance sheets of Italian banks. The rate of deterioration of the loans fell to the lowest levels since 2008, and is expected to continue to decline next year, with the continued growth of the economy”.

Also the consistency of the impaired exposures is decreased with the decrease in favoured by some transactions for the sale of sufferings. The rate of coverage of impaired loans increased, reaching a level slightly higher than the average of major european banks. However, he pointed to Via Nazionale, in the first six months of the year, the profitability of banks has decreased with the Roe halved to 2.5% compared to the same period of 2015, while the result of the operation is reduced by about a fourth. On this result have impacted some of the costs of an extraordinary nature, while value adjustments remained almost stable.

In the same period, the Cet1 capital grew by 10 basis points to 12.4%, a figure that the banks significant was equal to 11,7%, while for those that are less significant, amounted to 15.5%. Moreover, in June the ratio of prudential financial leverage for the first five banking groups reached 5.1% compared to 4.7% of a large sample of large european banks.

But the Italian banks are exposed to shocks of domestic origin and international that can be reflected on the capital markets and on economic growth. In particular, after the elections in the United States, bond yields increased in all advanced economies, as was seen with the increase in the spread on Italian government securities.

Another element of uncertainty comes from the regulatory initiatives at the international level. “In implementing it is important to take into account, besides the expected benefits, costs, short-term,” he stressed. The prospects for growth still modest in Europe and the uncertainty related to political developments in the main advanced Countries, could fuel strong changes in the prices of financial assets in the coming months.

the bank of Italy has indicated, however, a reduction of risks for banks related to the real estate market, where the trades are on the rise and prices are showing signs of stabilization. “In the coming quarters should continue to decline in new sufferings related to finance to companies active in the sector and to households for house purchase”. Also, if you are a drain on the financial strains of the real estate funds, on the other hand, reduced expectations about the profits of insurance companies because of the uncertainty in the financial markets and the slowdown of economic growth. Nevertheless, in the first half of the profitability of insurers in the Italian remained on the levels of 2015 and the indexes of solvency and quality of capital are on the whole high.