“That's not going anywhere. The banking system needs a change, but there are bankers who continue to think that appearances can be saved by firing workers" is the comment by Giulio Romani, general secretary of First Cisl, in the face of the data emerging from the analysis of the September quarterly reports of the thirteen main Italian banking groups prepared by the Union's Research Office.
“The refrain of the bankers – adds Romani – is that personnel costs too much, yet employee expenses are already decreasing in half of the banks and in the main groups they are equivalent to less than a third of net non-performing loans and 5-6% of the mass of net doubtful loans. Even if we absurdly fired all employees, we would be throwing a drop in the ocean. This isn't about cutting jobs, it's about converting them towards higher value-added activities. We need new organizational models, new trades, new production structures, but the banks should have a strategic vision, which for now is not even glimpsed".
“The truth – says Romani – is that we have lost the very meaning of banking. The numbers prove it mercilessly. The interest margin is declining in twelve out of thirteen banks, yet it remains the main source of income. Net commissions, which are the second item of revenues, fell in ten out of thirteen banks. The only three groups that have an increasing intermediation margin owe it to financial negotiations".
According to research by the Research Department of First Cisl, which analyzed the performance in the first three quarters of 2016 of the 13 major Italian banking groups, with the exclusion of those controlled by foreign banks and the credit institutions acquired by the Atlante Fund, the evolution of interest rates had a negative impact on net interest, which decreased in all banks, except in Credem, where they grew by 1,5%. Commissions decrease almost everywhere, except in Monte Paschi, Ubi and Banca Sella. Only Unicredit, Popolare Milano and Carige report a growth in overall revenues, compared with income from intermediation.
Labor costs, adjusted for employee redundancy incentives and the activation of the Solidarity Fund, decreased in 6 out of 13 banks. Administrative expenses, on the other hand, increased almost everywhere, except for Intesa and Banco Desio (a large part of growth is due to the higher contributions paid to the Resolution Fund and to the Guarantee Fund).
Profitability is down in most of the groups and as many as 5 banks out of 13 (Monte Paschi, Ubi, Banco Popolare, Carige and Creval) closed the first nine months with a loss. In terms of volumes, a trend reversal is underway in loans, which grew by +0,8% in September 2016 compared to the end of 2015. If gross non-performing loans are increasing in all groups, except Intesa and Creval, other gross doubtful loans, on the other hand, show an increase in only 5 banks (Intesa, Banco Popolare, Popolare Milano, Carige and Credem).
Lastly, the Research Office of First Cisl highlighted that if the coverage of non-performing loans and non-performing loans on shareholders' equity were to be increased to 78% (the non-performing loans of the four banks subject to resolution in November 2015 were valued at 22% of their nominal value), the top 5 banks would need, together, a further provision of 25 billion euro (29 for the total of the 13 banks analysed).
"The whole of these data - concludes Giulio Romani - tells us unequivocally that the issue of a new way of doing banking and that of the management of non-performing credit cannot be avoided, unless we want to helplessly witness the collapse of the national banking system" .
