The ABI reiterates all the criticisms of the EBA directive on the new capital requirements of banks. Its president, Giuseppe Mussari, indeed points out that “the sector is doing its utmost, in the extremely difficult given situations. We have an urgent, undeferrable need to recover and increase profitability. We are doing what we can on the home front. But help is needed on the front of the rules”.
In front of the senators of the finance commission, which is conducting a fact-finding survey on the relationship between banks and businesses, Mussari underlines that "the recovery of profitability is an indispensable condition for the sector to be able to support families and businesses even more and even better". And he adds: “Thanks to the decisive economic policy interventions in recent months, the overall situation is now tending towards a slight improvement, which can be further supported with the announced measures on the labor market. Credit activity – observed Mussari – in its aggregate sizes still shows, even in the recessive state in which we are now, growing trends even if at less important rates than a few months ago. The sector is doing its best in the extremely difficult given situations”.
On the recommendations of the EBA, Mussari articulates: "the ABI is evaluating the opportunity to appeal to the European court of justice", adding that "it is hoped that the Bank of Italy will adopt a flexible approach in the assessments of the recapitalization plans" and also that "following the stimulus of the Italian government, a change will be reached in the decision of the European council as regards the methodology underlying the Eba recommendation o at least to a postponement of the scheduled date".
Criticisms are particularly focused on: 1) the capital shield does not serve to protect the bank from contagion at this stage; 2) the EBA decision was interpreted as the possibility that some countries in the euro area could go bankrupt, resulting in an increase in the volatility of quotations on sovereign bonds and placement difficulties; 3) timing; 4) it is particularly critical to concentrate any capital increase processes in a short period of time.
“The recommendation of the EBA – adds Mussari – is however difficult to understand also in the light of the results of the stress test exercises that the same Authority had conducted last July. From the stress exercises, Italian banks emerged as reliable and solid“. Mussari insists: "If the current proposal of Basel 3 remains unchanged, the restriction of credit to SMEs would be inevitable".
The ABI therefore hopes that "a European level will converge on the idea of helping the banking system to support SMEs through the neutralization of the quantitative increases envisaged by Basel 3". Because in the opinion of the banks, the substantial immediate application of Basel 3 and the application of mark-to-market to sovereign exposures held in the banking book have generated pernicious effects and represented a powerful fuel in the crisis of confidence resulting from the turbulence of the "sovereign" markets.
The hearing is an opportunity to launch further thrusts at the EBA. Musssari explains that the loans granted by the ECB to Italian banks primarily serve to repay "the bank bonds which cannot be renewed and which must be repaid. It is very complicated to buy government bonds after the exercise of the EBA”, explains Mussari, who reiterates: “any purchase of government bonds does not compete with the disbursement of credit to the system”.
And at the end of the commission session, Mussari returns to the subject: Monti's request to the banks to buy BTPs "is right" but should be addressed to London and the president of the EBA. “We had said for some time that the Prime Minister's proposal could be a problem with respect to the EBA's plans. I think the observation is right but it should be sent to London and to Andrea Enria”. And therefore, is the conclusion, "we will see how the plans of the Italian banks will be evaluated".
Then he returns to a theme raised by Isvap: banks must not be prevented from selling insurance policies with home loans, because in this way the customer risks losing his home. “If you forbid us to make policies – explains Mussari – you leave the Italians in danger of losing their homes. The bank does not lose out: it takes away the house and the family is left homeless”.
