On banks' non-performing loans, new ones can be identified "margins of flexibility in the application of prudential rules, also on the subject of non-performing loans”, in addition to those introduced in recent months. This was stated by the governor of the Bank of Italy, Ignazio Visco, speaking before the parliamentary commission of inquiry into the banking system about the new ECB rules on the coverage of NPLs.
The reference is in particular to the "calendar mechanism” launched in 2017 by the Eurotower, which provides for the full write-down of non-performing loans according to pre-established deadlines. The goal is to ensure that NPLs do not accumulate in bank balance sheets, but in this situation the rigid application of the law risks producing a further credit crunch, which would be the coup de grace for businesses and citizens. From here the importance of flexibility, which – according to the Governor – could increase further in the future.
At the moment the priority is not to compromise "the ability of banks to adequately finance the economy, particularly in the complex phase of the exit from the health emergency”, underlined the number one of Bankitalia, adding however that “the flexibility on the part of the supervisory authorities must be matched by the supervision and mitigation of risks by the intermediaries”.
According to Visco, “it is to be expected that this situation will push upwards in non-performing loans”, which still represent “the main risk for Italian banks”. The context, however, is less worrying than in the past, because the credit system is starting "from a more solid position. Compared to 2007, in the banking sector as a whole, the ratio of better quality capital to risk-weighted assets has more than doubled, while compared to the 2015 peak, the stock of NPLs has decreased by more than two thirds”.
To further strengthen it, the Governor hopes for "progress in the establishment of non-performing credit management companies (AMC)", but also acknowledges that "the project is limited by the European Commission's restrictive guidelines on state aid".
In particular, in the event of the transfer of non-performing loans to a public bad bank at prices above market prices, "it would be necessary to impose loss sharing on shareholders and creditors, a condition which clearly discourages recourse to this instrument altogether - he the number one of Via Nazionale said again - In the absence of a change of opinion by the Commission on this key aspect, the project, which has been under discussion for some time, does not seem destined to produce significant benefits".
The solution of the rebus then goes through one of the reforms that Europe has been asking of us for years (and that Mario Draghi intends to launch with the new government): that of civil justice. “The calendar mechanism would not be a problem if the times of civil justice in our country were aligned with those prevailing in the rest of Europe - concludes Visco - All other conditions being equal, in fact, the high duration of debt recovery procedures it translates, mechanically, into a greater stock of NPLs and depresses their value. It is therefore necessary to intervene at the root to speed up the times of civil justice, affecting the root cause of the phenomenon".
Read the full text of the hearing.
