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Banks: Action Institute, 15 Billions Gone Up in Smoke

Author: -

Date: 3 June 2017

Topic: Credit

Rome, June 3rd, 2017 (AdnKronos) – 15 billions of stocks and subordinated bonds of Veneto Banca, Banco Popolare di Vicenza and four rescued banks gone up in smoke and almost 3 billions of subordinated bonds of Mps at risk. The savers hit by the shock were 300000 and 800000 are potentially involved. Despite the disastrous financial situation, there has been no serious debate on how to improve the Italian saving system, which is one of the most dated in Europe. The opinion by Action Institute wants to offer new ideas to the legislator in order to encourage a strong and lasting answer to this crisis. Reviewing the governance by taking care of the conflicts of interest, revision of the products with attention to the mitigation of conflicts of interest; tax incentives to promote a professional and efficient allocation of savings; financial education in schools. These are the four pillars of Action Institute, the independent, non-party and no profit think tank , including in his scientific committee, Guido Tabellini (former Rector of Bocconi), Alberto Alesina and Michael Spence (Nobel prize winner). Italy is lagging behind when it comes to savings management: on one side, Italian savers are the less financially literate among other developed countries (a study from S&P shows how only 37% of Italians can take conscious financial decisions. Moreover, 21% of Italian students are among the worst in terms of financial education in the OECD area); on the other, too many times saving management was carried out by banks that were clearly acting in conflict of interest. We also have to account for the fact that this historical moment is particularly challenging: the monetary policy of the ECB, with interest rates close to 0, requires competencies aimed at preserving and enduring investments. The proposals set out by Action Institute through an opinion by Sandro Pierri, former CEO of Pioneer, aim at improving the allocation of savings of Italian families through the so-called “richness effect”, thanks to which a rise of 1% of the financial estate of a family would create 40 billions of aggregate richness, about €1500 per family, and at creating an environment in which savers can make responsible decisions, in line with their lifestyles and life perspectives. “It is crucial – says Carlotta de Franceschi, president of Action Institute – that the public debate is aimed not only at understanding the responsibilities of the system, but also at embracing the creation of the right conditions that will prevent new aggressions to people’s savings”.

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