Banks, savings and real economy: perspectives for Italy under the new European rules

Banks, savings and real economy: perspectives for Italy under the new European rules

Autore: Action Institute

Data: 01/09/2016

Ore: 10:00 - 13:30

Luogo: Università degli Studi Guglielmo Marconi - Via Vittorio Colonna 11, Roma

Tematica: Credit

Description of the event:

In November 2014 the European Banking Union became operational. The new framework applies to all countries in the euro-area and aims at creating a safe and sound financial sector for the single market. This new regulatory environment has a different impact on both national banking sectors and economic activities, depending on the specificity of each country.
The state of the Italian banking system is largely debated among European institutions, politicians and investors. Italian banks face country-specific challenges, which depend on structural issues as well as the legacy of a deep economic crises. The adoption of the Banking Union poses critical challenges when it comes to restructure the system in full compliance with EU rules and at the same time safeguard retail investors, the recent recovery and institutional investors’ trust.

First of all, the exposure of Italian households to national banks’ debt securities is the highest in Europe. In Italy, 40% of banks bonds are held by retail investors, in Germany less than 15%, in France and Spain no more than 5%. Italian households hold € 200 billion of senior bond and € 31 billion of subordinated bonds.
What do you think are the most likely scenarios? How would you weight and balance the political costs?

Second, the lack of confidence from institutional investors that the Italian banking system is experiencing poses a real systemic threat (shares of Italian banks decreased by 45% since the beginning of 2016, versus 25% of European banks).
How would you assess general regulatory risk for investors in the euro banking area? What do you think could be done to provide confidence to capital markets and avoid spill-over effects onto other countries?

Third, while strengthening their balance sheets, Italian banks continue deleveraging. Despite the recent efforts to activate alternative credit channels, the current banking weakness is hurting the economy during the phase of recovery.
What do you think would be the impact of current deleveraging on the real economy, especially on recovery? In a moment where the European Commission seems less rigid in pursuing its fiscal targets within the EU, how can we leverage a banking policy that supports growth while safeguarding the financial system? Do you think Europe should be more ambitious in its parallel implementation of the Capital Markets Union? How?

Last, the Italian stock of Non Performing Loans (NPLs) stands at euro 200Bn, 80% of which is toward SMEs and corporates. These NPLs are the hardest to work out by investors and usually require turnaround rather than a mix of financial engineering and real estate skills.
Do you feel there is substantial awareness among Italian and European institutions on the peculiarity of the Italian NPL market? What do you think are the most urgent tools or policies that should be adopted to solve the problem?


Carlotta De Franceschi,President of Action Institute
Nicolas Véron,Senior Fellow at Bruegel and Visiting Fellow at Peterson Institute
Rainer Masera,Dean of the School of Business, Università degli Studi Guglielmo Marconi
Stefano Micossi,General Director at Assonime

Type of the event: Reserved

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