Italian banks: Bce assisting on Npls

The regional bad banks to which the Npls will be transferred are coming. But at which price? The Bce decides to intervene. Same political evaluation for everybody. Hooray for efficiency!

Stock exchange during summer is always dreadful. You never know what it may happen. But it’s also true that, according to many, the Italian stock exchange is overestimated and many banks are at their lowest points. Hence, it may be a good buy opportunity. But there is the threat of NPLs. Nobody knows how to appreciate them, how to evaluate them, and their impact on the financial statements. And indirectly on the stock exchange quotations.

Speak the truth. Are you one of those people that think or have thought this during the past few weeks, perhaps watching the results in the stock exchange of banks such as Unicredit, BPER or Intesa SanPaolo to name a few? Well, you can calm down.

It seems indeed that the evaluations of the NPLs (non performing loans) will be decided by the Bce itself. A committee guided by Daniel Nouy will set the price at which the banks can transfer the NPLs to the regional bad banks. Think about it. Isn’t it fantastic?

I’ll make a comparison to better illustrate the idea of the Bce. Imagine you are the owner of a used car from 2007. You want to sell it, you don’t know how to do it and the first thing you do is checking the evaluations on the specialized magazines. But you also have to consider the conditions of tyres, card body, and engine, etc… Then the Bce says: “Stop, let’s avoid mess. We’ll take care of it. All the cars registered in 1997 are worth the 20% of the current purchase price, of a new car”. It’s obvious that this will originate some evaluations not coherent at all with reality.

Should we fear a too strict Bce? I don’t think so. It would counterproductive. If the evaluation is “generous”, the Italian banks will celebrate. It’s sales time, after all.

Source: http://intermarketandmore.finanza.com/banche-italiane-assist-della-bce-sugli-npl-81018.html

Translator: Cristina Ambrosi

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