Italian banks face the problem of overstaffing. This is the opinion of Salvatore Rossi, general manager of the Bank of Italy, who spoke today at the Credit Day.
“It is necessary to accelerate the rationalization of the central organizational structures and of the network – said Rossi –, in order to reabsorb the excess production capacity that has arisen in these long years of crisis. In quite a few cases interventions on personnel will be inevitable: existing social shock absorbers can be used, i.e. early retirement financed by the sector solidarity fund, for which the possibility of use has recently been expanded. But, if necessary, ad hoc interventions will be required".
According to the general manager of via Nazionale, the real problem of our banks "is the low profitability. Italian banks share it with most European intermediaries, due to the weak prospects for economic growth, the increase in competition, the exceptional, albeit temporary, fall in interest rates. In Italy, however, the problem is particularly acute and also reflects the high level of non-performing loans, legacy of the long and deep recession”. AND the disposal of NPLs "will inevitably take time".
The difficult period of the banks is also reflected on companies, who still do "too much reliance on debt and too much of this debt is banked”, a larger portion than that present “in any country or area of the advanced world”. In all size categories, Rossi specified, “Italian companies are more indebted than the euro area average, increasingly from large to small and very small”.
Rossi then underlined that “lack of risk capital: but to expand, to conquer new markets, to innovate, companies need risk capital, which is the main tool for financing investments with high but uncertain returns. It makes it possible to reduce the moral hazard problems intrinsic in debt contracts, aligning the interests of the financed subjects and the lenders and allowing the latter to benefit from the high returns on the investment in case of success”.
The general manager of Bank of Italy also anticipated some of the numbers released by Aifi, which show that in 2015 risk capital investments amounted to just 4,6 billion euros. The number of listed non-financial companies also remains low, at 256 against over 700 in France and Germany. Their market value is also not encouraging, very low in relation to GDP: 20% in Italy, compared to 47% and 69% respectively in France and Germany.
For the four bridge banks, Rossi said again, "there are hypotheses and tools to find a positive solution to these problems and avoid liquidation". Rossi does not comment on the ongoing negotiations but states that there are "many players around the table". The general manager of Bank of Italy recalls that the supervisors – the ECB and the Bank of Italy – are concerned “that potential buyers carry out the correct operation for their solidity. There is Brussels worried that there is no state aid, then there is the Italian government involved and there is us, worried about the country's financial stability and that there are no hypotheses of financial contagion. It is a complex negotiation”, concluded Rossi, recalling that the Bank of Italy is the owner of the four bridge banks and that Nicastro, president of the four banks, “is leading the negotiations”.
Read Salvatore Rossi's interview with FIRSTonline: "Stability law, referendum, banks: what the Bank of Italy thinks"
