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Italian Npls: different speeds according to BCE and Banca d’Italia


While the General Director Panetta suggests to not rush on the disposal of the impaired loans, from the BCE Angeloni argues that slowing down would be an error 

After the discussions about Euro and Europe at different speeds, also for what concerns the reduction of non performing loans, it seems to be contrasting opinions on how to manage the situation, which is one of the main problems of the Italian banking system.

Recently, Fabio Panetta, General Director of Banca d’Italia, has publicly stated that the impaired loans issue needs time to be addressed and that it will probably take an intervention from the public institutions. His position is aligned to that of the Consob President Vegas.

The member of the BCE Surveillance Committee Ignazio Angeloni seems to be instead of a different opinion. According to him, in fact, slowing down the disposal process would be an error and he reiterates how the new guidelines expressly call for the reduction of the non performing exposures.

Of the same opinion is Fabrizio Pagani from the administrative office of the Ministry of Economics, according to whom it is not appropriate waiting for “structural solutions” as for example the European Bad Bank, speculated a couple of months ago by Andrea Enria, President of the European Banking Authority.

The NPL problem and its possible solutions

The high stock of bad loans is a significant burden for the entire Italian banking system and it has led in the worst cases to situations of financial disarray, ending with a liquidation process, such as in the case of the four good banks, or, as in the case of MPS, with a precautionary recapitalisation, or, as it happened with the Venetian banks, the bailout attempted by the Atlante Fund wasn’t enough to avoid the State’s intervention.

However, examples of critical situations successfully managed are not lacking, as proved by the success of Unicredit in finding a feasible rebalancing process within its organization that brought to important divestitures of performing and non performing assets and that was completed by the biggest capital increase ever seen in the Milan Stock Exchange.

The different strategies implicitly suggested by the heads of the financial authorities show two opposite approaches, one is for intervention and it considers as necessary a political and economic action to overcome the crisis, the other trusts the market to get rid of NPLs and for the management of the internal reorganization and recapitalization processes.

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