In 2010, in the space of a few months, the North East and especially the Veneto are at the center of high-level macroeconomic forums, with the presentation of studies of institutional expression, as never happened before.
In June of that year, in fact, the then Governor of the Bank of Italy, Mario Draghi, receiving an honorary degree from the CUOA of Altavilla Vicentina (the same recognition had been assigned to Zonin in 2005) spoke of the Northeast, defining it « a crucial area for the entire Italian economy, where almost a fifth of the population lives, a quarter of the GDP of the private sector is produced» and «it is from this area that just under a third of Italian exports originates».
And he adds: «But now the North East is struggling to keep up, like all of Italy, with respect to the richest regions of Europe. It is with these that he has to deal with ».
A few months later, again at the CUOA in Vicenza, a ponderous study of over 700 pages by the Bank of Italy was presented entitled "The economy of the North East", in which economists from the institute and academics from many universities underline the of the economic development of North-Eastern Italy.
In this somewhat battered economic panorama, however, there is widespread indication that it will be the local banks (popular and mutual banks) who will raise a barrier against the recessionary effects of the economy, given the more prudent policies of the big banks.
In fact, Mario Draghi adds, anticipating the results of the works mentioned above: “Faced with a greater variety of products and services offered to customers, the large intermediaries have a less intense bond with the territory, which instead represents one of the strengths of the fabric of medium and small banks. The large presence of local intermediaries is a peculiar aspect of the North East, with an average level of interest rates lower than elsewhere.”
So continuing off the cuff in his degree dissertation, the Governor concludes, as the chronicles of the time recall, stating that: “The link with the territory means more in-depth knowledge of the customer that no mathematical model can replicate. In this way it can continue to be supported even when the figures would not allow it. Staying in the area means knowing how to bank.”
It seems difficult to reconcile those statements on the need to counter the lower commitment of the large credit intermediaries in the Northeast area with the fact that just over a year earlier, the Governor himself had authorized the acquisition by Monte dei Paschi of Banca Antonveneta, handing over one of the most important banks in the region to the third largest bank in the country. It actually seems very strange that the message addressed by Draghi to the production and financial system goes in a totally opposite direction compared to his recent work. But even the analyzes mentioned above by the economists of the Bank of Italy, to which he explicitly refers, seem to leave little doubt on the desired role for the local bank.
It will therefore be a real surprise to be faced, only a few years later, with the almost complete and sudden disintegration of the Veneto banking system. Indeed, a long economic crisis was expected, not a banking crisis of these proportions.
Yet already in 2010, at the time of the CUOA events, something underground and silent, as happens in a seismic phenomenon, was taking shape, accumulating increasing doses of energy, which would be released all at once and in a destructive measure, with the consequences that are before our eyes today.
In fact, while the industrial production of the Veneto stops already in 2008, the loans of the local banks continue to run, as they had done throughout the first 2000s, to stop only in 2012. It is more than reasonable to think that in those years the credit instead of growth, goes more and more to support the precarious financial balance of businesses. It is a credit that is born 'sick', because it is intended to cover the imbalances that are motivated by the withdrawal of the production model of the region. The disbursement of those loans sees above all the local banks engaged.
When these credit flows are interrupted, substandard loans, non-performing loans and losses begin to emerge, in a process which gathers increasing speed and which nothing can stop over the next five years.
If the crisis of the Veneto entrepreneurial system is of a structural nature (given that it must commit itself to recovering productivity and competitiveness), how can the small local banks be able to stop it, considering that, in order to protect their depositors, they should, in that situation, become more selective than the others and certainly not more lax?
How can this local banking fabric, which in 2010 weighed less than half of the total regional credit, take on the financial support of an industrial reconversion?
Let us now move on to observe what happens from 2012 to 2017, the year of the final collapse of the Veneto system. Here we have to distinguish two sub-periods: the one that goes from 2012 to 2014 and the following one from 2015 to 2017.
In the first, the efforts of the main regional banks to maintain adequate levels of capitalization of the regional banks are already evident, with repeated placements of equity and debt instruments (shares and bonds), which, in the case of Vicenza and Veneto Banca, are supported by artificial prices of the value of the shares and by 'kissed' operations, already starting from 2012.
In fact, while the stock market indices of listed banks have already been decreasing for some years, that of the shares of the two cooperative banks, which are not listed, grew up to 2014, doubling compared to a few years earlier: which will make it possible to double in the same two years also the number of members. Banco Popolare, which in 2017 will eventually merge with Popolare di Milano, will make several capital increases for a few billion, without solving its imbalances, to maintain a condition of autonomy.
It is a continuous run-up between credit risk and capital levels, which is based on the now definitively full-blown crisis of the real economy. Credit sinks on increasingly friable ground, until the two banks, which later went bankrupt, exceed the limit of 30 billion euros in assets, which makes them classified as systemic in the new context of the banking union.
In 2014, three Veneto banks out of a total of 15 were in fact entrusted to the supervision of the ECB within the new European framework. And from that moment their ordeal begins, because the risky policies followed up to that moment emerge definitively and the difficulties of the financial resources to keep up with them. After the first checks by the new European supervisory bodies, the disastrous situation of the credit portfolios can no longer be concealed.
The 2015-17 period is the final one, during which the negative situation of many smaller banks also emerges, due to the supervisory activity of the national authorities, which leads to the commissioning of various cooperative credit banks, to the imposition of mergers, up to the liquidation of the two popular ones and the arrival in Veneto of the largest Italian banking group, aided by the state.
In no other Italian region has there been such a high number of instability.
There are also substantial similarities between the crises of the Popolari and of the BCCs which are: sudden, due to having underestimated up to the last minute the albeit clear warning signals, virulent due to the destructive force of capital resources, irreversible, since almost all the banking institutions in conditions of critical issues have irreparably disappeared.
Having to go to the causes of this generalized condition, we cannot fail to go back to the interpretations provided by institutional sources in 2010, to ask ourselves whether certain statements about local banks have had an impact on their credit policies, in the sense of having pushed them towards an improper role.
And even worse if those interpretations have not even favored a context of moral hazard, which has encouraged excessive risk-taking (a phenomenon that intrinsically brings with it practices contrary to deontology and the law, now emerging in large numbers) and has supported the ambitions of local bankers aimed at pursuing objectives of size and power, in a context of growing mingling between banking and industry.
We immediately want to rule out that this interpretation of ours sounds like a justification of behaviors that disrespect the most basic canons of prudence, which can only be attributed to the responsibilities of the individual banks and individual bankers involved in the instability.
But it seems interesting to us to address the issue of the effects of local economic analyzes on the banking system, to better identify the causes of behaviors that have distorted the role of the local bank in recent years.
