The crisis involving some Italian Credit Institutions emphasizes the security of the credit system and deserves careful reflection. We see banks in risk in 2017 in Italy between bail in, bankruptcy and impaired loans.
Is your bank one of the most at-risk banks?
Saved Savings Banks: Banca delle Marche, Bank Etruria, Carichieti, Cariferrara
These were the first institutions to approach heavily to bankruptcy. Already for a long time in a heavy crisis and then subjected to commissioning, these 4 banks have called for the extraordinary intervention of the Government not to close.
As the bail-in (still in effect since January 2016) has not yet been used, the EU’s government and commission has given way to a plan for the creation of four new banks with “healthy” credits, cleaned out from those in suffering and able to immediately provide banking services.
On the other hand, bad credit management is a bad bank. The whole plan is based on resources and funding mostly deriving from Unicredit, Intesa Sanpaolo and Ubi Bank and the national banking system.
The Bank’s rescue resolution, which is crucial for bank rescue, is in fact created with bank financing: this has paid the share of 2015 of 600 million euros and has already anticipated the next two. But such funds are not enough to cover the hole left by the four crisis banks, pushing Unicredit, Intesa Sanpaolo and Ubi to lend another 1.6 billion euros to reach the 3.6 billion needed.
The role of the Cassa Depositi e Prestiti, which has taken the commitment to support the operation, was also important in the case when the Fund had no more resources to meet its repayment after the 18 months of funding of the three banks.
This is a fundamental element that translates into the total safeguard of current accountants. Unsurprisingly, shareholders and subordinated bondholders are unfortunately exposed, accusing the devaluation of the suffering, even coming to the point of decreasing or resetting the value of the bonds in their possession.
In plain terms, current accountants do not run any risk, while those who have bought subordinated bonds or bank shares are not protected by the decree law, seeing the investments heavily damaged (in many cases disappeared).
A disruptive situation that has led in recent days to numerous events by these small investors, who in many cases risk losing life’s savings. Savings sacrificed for the supreme salvation, but that severely damage ordinary people.
The 8 Italian banks at risk according to the Financial Times
In the campaign on the constitutional referendum of 4 December, there have been numerous voices regarding possible repercussions on Italian institutes, especially in case of NO victory. A reality that the days after the referendum seem to dampen, but that does not erase the many doubts related to Italian political uncertainty. As predicted, the clear affirmation of the NO front opened a government crisis, pushing Premier Renzi to resign.
A moment of uncertainty that had already been announced by the Financial Times, speaking in numerous articles of high bankruptcy risk for at least eight banks in the beautiful country. The lack of clarity at government level is likely to increase market certainty by removing potential investors to recapitalize them.
According to the well-known city daily, the involved Institutes are:
- Monte dei Paschi di Siena;
- Popular of Vicenza;
- Veneto Bank;
- Banca Etruria;
- Bank of the Marche;
A very pessimistic scenario is the one pre-announced by the Financial Times, but it still finds concrete foundations in the reality of the facts. Mostly linked to the destiny of Montepaschi: the failure of the rescue operation could force the Italian government to special measures, but above all it could severely undermine the already mild market confidence towards the Italian system.
Situations that could involve, even according to the Financial Times, the 13 billion euro capital increase of Unicredit, the first Italian asset bank.
Forecasts that the news of these days about the rejection of the Monte dei Paschi plan of recovery is sadly close to reality.