Portugal 
Spain 
Greece 
NPL and Courts, Italy is at the bottom of the chart
27 June, Il Sole 24 Ore
What is a non-performing loan and an unlikely to pay? They’re both credits to collect. How do you collect them? One must start a procedure which often gets stuck in Court. Which amounts are we talking about? 264 billion, according to the Pricewaterhouse Coopers estimate for 2017. Hence, there is a direct connection with the capacity of the judicial system to resolve these impaired credits. Is the Italian judicial system capable of dealing with the stock of credits? According to the analysis by Romualdo Rabossi and Giulia Gelati, respectively Managing Partner and Senior Legal Advisor for Intrum Law Italy, presented in Milan during the latest edition of the Credit Conference, the answer is no. The capacity of the system to deal with a judgement of the court of first instance is slightly better than the one in Cyprus. According to the analysis by Intrum Law, it takes 100 days to obtain a sentence in Germany and Denmark, 300 in France, 400 in Spain, Portugal, Greece, Croatia and Slovakia. In Italy, this time is around 500 days on average. Only Cyprus is worse with 600 days.
The connection between NPL and justice is easily explained: if the judicial system works well, the NPL and UTP are likely to resolve positively for who sells them, who buys them, who securitises them and for the potential subscribers of the obligations backed by this type of credits. Otherwise, there is no gain. This is why an efficient judicial system is an essential condition to solve this crucial matter affecting the Italian banking system. It’s clear that the Italian legal system is not efficient. Despite the dishearten data regarding timing, there have been some improvements. In the last ten years, in fact, the civil procedures in the country have reduced from 5 million in 2009 to 3 million in 2017. Such a result is due to the reforms made in the past few years to reduce the workload and to get rid of the pending procedures. Moreover, the amounts claimed by the public administration as compensation for the damages due to the length of the processes have sharply reduced, having gone from 153 million euro in 2013 to 53 million at the end of 2016. Concerning the impaired credits collection, the survey carried out by Intrum Law shows how the duration to complete a collection procedure in the Italian courts is way longer than the time expected by the creditors (249 days), namely 361 days in 2015, 355 in 2016 and 328 days in 2017.
Regarding the single courts, the most efficient court is in Trieste (164 days on average for a collection procedure), followed by Palermo (200 days), and Bolzano (210 days). Naples is the worst with 746 days on average, followed by Taranto (652 days) and Catania (569 days). Concerning Rome and Milan, it takes respectively 545 and 343 days. Who is to blame? The judges? Again, the answer is no.
The answer comes from the 2017 Justice Scoreboard, the survey by the European Commission on the quality of the judicial system in the EU. According to the report, Italian judges are the busiest in Europe. The demonstration is that the clearance rate, namely the civil and commercial resolution rate, is one of the highest in Europe, setting around 120%. That means that not only judges resolve all the cases assigned to them, but they also work on the backlog. Therefore, the three crucial elements, along with the high rate of litigations that keeps judges busy and the lengthy collection procedures, is indeed the number of judges: too little for the workload. What may the possible solutions be? Increase and optimise the judicial offices, as well as give some incentive to the judges for their performance.
Source: Il Sole 24 Ore
Translator: Cristina Ambrosi