On the whole, supervision has fulfilled its role on the banks. And the government's strategy has led to a 25% reduction in NPLs from 2015 to today. Now we need to continue with risk reduction and not let go. In a nutshell, this is the meaning of the long speech by Economy Minister Pier Carlo Padoan in a hearing before the Parliamentary Commission of Inquiry into the banking crises.
“The supervisory authorities – said the minister – had to face a transition phase that shifted responsibilities to a European level. There was one substantial system management skills, but net of these institutional changes we cannot exclude cases in which they have occurred important responsibilities at the level of individual institutions. Not all bank crises are related to the crisis, in some cases there have been management shortcomings ”.
"The supervisory regulatory framework that has evolved in Europe in recent years with the banking union project is unprecedented - continued Padoan - Single supervision has been accompanied by the resolution system and I hope that it will soon also be accompanied by the guarantee system of the deposits. Only when all three pillars are operational will we be able to give an assessment of the overall effectiveness of the supervisory system. This significant change in the regulatory framework it happened in the context of very serious crisis, particularly relevant in a bank-centric country such as Italy. All this resulted in a kind of paradox. Supervision has moved to the European level but has become more complex. All this increases the time within which to make decisions. In the meantime, nation states found themselves having less operational capacity in a more complex context. All this must be kept in mind in order to make a judgment on vigilance".
Following the various Italian banking crises of recent years, "in no case was the bail in used and senior bondholders and depositors have always been protected – underlined Padoan – by also making them available refreshment mechanisms in favor of retail subordinated bondholders. It is estimated that around €190 million will eventually be repaid, more than half of the total.
Between 2007 and 2013, Padoan recalled, “GDP fell by just under 10%. The crisis has had repercussions on Italian banks, with the progressive increase of non-performing loansuntil it reaches abnormal levels. In other countries the banking crises were caused by the collapse in the prices of various assets, primarily real estate, which led several institutions into insolvency. In Italy there were no property bubbles or exposure to toxic instruments. The crisis did not therefore manifest itself suddenly, but gradually”.
To address this situation, the current government and the previous one "have carried out incisive reforms and innovative projects - continued the number one of the Treasury - I will indicate three areas: governance reform (larger cooperative banks have been induced to transform themselves into joint-stock companies); the procedures of insolvency and debt collection and the development of a non-performing loan market. The strategy put in place is paying off: gross impaired loans have come down from the peak of 361 billion recorded in 2015 to the current ones 287 billion, which can be estimated taking into account the transactions already defined and in the process of being completed, with a reduction of more than 25%. After reaching the 2015 peak of 18,2%, the ratio between gross impaired loans and total loans rose to 14,4%, while the ratio between net loans and total loans rose from 10,9 % to 8%”.
Now "we must maintain our commitment to reduce risks in our banking sector, starting with non-performing loans, consistently pursuing the ambitious plan agreed in Ecofin last June", concluded Padoan.
