The European Central Bank takes action this morning for phase two of the Asset Quality Review of the state of health of Italian banks. There are 240 inspectors, divided into 15 groups of various nationalities (the Joint supervisory teams), and they will knock on the doors of the 15 main credit institutions in our country, five of which are preparing for a capital increase for a total of around seven billion euros in the coming weeks. These are Mps, Popolare di Milano, Banco Popolare, Carige and Popolare di Vicenza.
The supervisors will be formed by staff from the Bank of Italy and the ECB, who will collaborate to carry out, in about four months, a coupon of the financial statements of the institutions destined for single supervision (130 throughout Europe, equal to 85% of continental assets) . The focus of the checks on bank books concerns the quality of the assets, the levels of coverage of difficult loans, including those in bonis, and the evaluation of the guarantee collateral.
For Italy, the bill promises to be high: out of the 155 billion euro of gross non-performing loans, with an average coverage ratio of around 42%, new provisions will be set aside in the 2013 accounts alone, which financial analysts estimate at about ten billion.
After this step, a new EBA stress test will start in May, which will concern the ability to absorb sovereign risks. The path will culminate with the launch, on 4 November, of the new single European supervision which will however continue to rely on the action of the Bank of Italy, which has recently reorganized its structure in this perspective, and of the supervisory authorities of the other Villages.
