Bad bank of my desires. Everyone talks about it and the recipes multiply. The bad bank construction site that has been open for some time seems to have regained strength. There is Intesa Sanpaolo where, starting from the real estate sector, one would think of an internal bad bank, in the wake of what RBS has done in the United Kingdom. Then there is the idea of an external vehicle together with Unicredit and which would also involve the private equity fund Kkr. Finally, Mediobanca (already entered the field on the subject with a report a year ago in which it invited Spain to emulate) would come to the rescue of some medium-large banks (it would have started talks, for example, with Bper and Creval) with a vehicle for the restructuring of non-performing loans which could become operational by the summer.
Already because Mario Draghi's asset quality revie is getting closer and closer. And bankers are scrambling to find a way out of balance sheets squeezed by a mountain of bad debts. But today the situation is overall more favorable to the idea of implementing a bad bank. “After the revaluation of Bankitalia quotas – explains the professor Giovanni ferri – which has increased the capital of the big banks, it is now easier to deal with a discussion of cleaning up the balance sheets”.
Non-performing loans, as they are called in accounting jargon, have now reached 150 billion euros and are expected to increase in the coming years, according to Prometeia data. For analysts separating "bad" loans from good assets would allow banks to enhance their core business and sell problem loans more easily. And they expect every single bank to gear up on its own. Overall, the model that the large Italian banks would have in mind (different from the Spanish solution) aims to separate the riskiest portfolios with more differentiated business and risk profiling channels. On the other hand, in recent days the president of ABI, Antonio Patuelli, also noted that "the hypothesis of creating a bad bank, into which the non-performing loans of the banks flow," is one of the many market solutions at the study, but it is not a system solution like those proposed by Bank of Italy or the Treasury".
Yesterday, at Forex, the governor of the Bank of Italy, Ignazio Visco, expressed his propensity for systemic bad banks and we will see what effect his words will have.
LOST ORDER OR BAD SYSTEM BANK?
The construction site is open. However, the question remains whether the randomized solution is the best possible or whether instead it would not be better to think of a system bad bank. Many believe, and Bank of Italy and the IMF have said so in the past, that Italy does not need a solution like the one implemented in Ireland and Spain. In an interview yesterday in Il Sole 24 Ore, the CEO of Bnl-Bnp Paribas, Fabio Gallia, noted that to solve the problem of non-performing loans "system operations, such as the idea of the bad bank, are not necessarily needed".
Adriano Bianchi, Managing Director of Alvarez & Marsal Italy, the Italian division of the American consultancy company which is working on the dossier opened by Unicredit (with Kkr), "the bad bank, if implemented, should be a system initiative especially in a country where bank credit is based on bilateral lines and therefore to assume that we proceed in random order seems unrealistic”. But there is system operation and system operation.
“Talking about system operations – he explains to Firstonline – however shouldn't mean guaranteeing the survival of all the subjects involved (both on the creditor and debtor side) and this, in Italy (the country of Efim, of Been in liquidation for over 30 years.), it is not so obvious. We are therefore faced with two contrasting and hardly compatible needs: if a system operation is carried out, in order to be effectively effective - and not simply be financial speculation or a new bandwagon that absorbs the already scarce resources available - it should be governed with private criteria but at the same time ensure that no one can refuse to participate".
There have been examples of successful recourse to the bad bank system: in Spain and Ireland. But in Italy the situation is more complex and the most difficult solution to find. Italy has a money problem and following Spain's path means placing oneself under the protection of the ECB or the EU. The nature of the credits is then different and more complex (in Spain they were mainly real estate, which generates a considerable difference). “In Spain – explains Bianchi – the Bad bank, made essentially in relation to the real estate sector, has tried to achieve two objectives: a) to remove from the banks' balance sheets an enormous burden which would have prevented them from operating normally for years as they were influenced by capital losses and the solvency problems that would have resulted, b) to regulate a market – the real estate sector – in which excess supply will continue to influence prices and transactions for many years to come”.
And in Italy to build a bad bank, what objectives would you like to pursue? “In my opinion – replies Bianchi – it should: a) certainly eliminate the ballast from the banks' balance sheets as was done in Spain but, as mentioned, also have an eye on cleaning up the market from a series of players (both banks and debtors) which on the market can no longer be there. Since the type of NPLs that affect the system is much more diversified than it was in Spain, I would personally be in favor of a series of initiatives focused by sector/type (real estate, industrial, services, consumer credit) which can thus fulfill both purposes: to clean up the balance sheets but also to clean up the market of counterparties who today, artificially kept standing, take space and market shares away from healthy debtors and who can compete efficiently on the market".
With a view to a systemic solution from the banking circles, a possible intervention by the bank is called into question Cassa Depositi e Prestiti which thanks to the stability law for 2014 will be able to purchase securities issued as part of securitizations with the object of loans to small and medium-sized enterprises, in order to support credit towards the latter. The method of system operation is also preferred by Giovanni Ferri. He would have the merit of not leaving anyone behind, especially small institutes.
