“Business growth in 2015 could exceed our July projections by nearly 1%. In our country, GDP has returned to growth for the first time since the beginning of the sovereign debt crisis at a rate of around 1,5% on an annual basis”. From the recovery of the GDP to the upcoming bad bank, from the reform of the Popolari in the process of being implemented to the "necessary" one of the Bccs, passing through the cases of the popular banks of Vicenza and Spoleto and the supervisory role played by via Nazionale: it is a speech at 360 degrees the one delivered today by Ignazio Visco, governor of the Bank of Italy, during the Savings Day organized in Rome by ACRI.
“The initial boost from foreign demand was accompanied by that of domestic components – continued the number one at Palazzo Koch –, with the consolidation of the recovery in private consumption and the gradual restart of investments. Business surveys confirm growing optimism about the trend in demand, which encourages the propensity to invest. The significant increase in employment, which also benefited from the measures adopted by the Government, will continue to support household consumption”.
In general, according to Visco, the Italian economy “must recover the accumulated delays in adapting to the great changes in the global economy, in technology, in demography. The recovery must be consolidated and strengthened” and in this sense “finance and banks have an essential role to play”.
BAD BANK: LIMITED OR NO PUBLIC PARTICIPATION
“The public participation” in the capital of an Italian bad bank, underlined the Governato, “would be limited or nil: there could be a state guarantee on the senior liabilities issued by it to finance the purchase of assets. Over the next few weeks, the feasibility of the project will be definitively ascertained. Regardless of the outcome of the verification, the banks burdened with large non-performing exposures will still have to identify, in agreement with the supervisory authorities, the most appropriate ways to manage these assets in the most efficient way, in order to achieve their gradual downsizing" .
THE POPULAR REFORM IS GOOD, NOW WE NEED THE BCC
According to the number one on via Nazionale, after the reform of the cooperative banks, which is giving "significant stimuli to the Italian banking system", "a reform of cooperative credit is now necessary. The main source of nourishment for the mutual banks' assets, self-financing, has been substantially dried up by the effects of the economic crisis. In the absence of decisions, the necessary increase in the levels of coverage of impaired loans would lead to a further compression of the self-financing capacity; a non-marginal part of the CCB system would face negative assessments by the supervisory authorities and might not be able to meet the need for greater capital endowments. Difficult situations that are difficult to manage could ensue”.
A point on which discussion is open “is whether the cooperative group should be one or more than one – continued Visco -. The hypothesis of a single group, if shared within the category, certainly has positive aspects, but if there is no consensus on the solution, this should not be a reason to stop the reform”.
BAIL IN: DEPOSIT ABOVE 100 EUROS UNLIKELY TO BE AFFECTED
As for the new bank crisis resolution mechanism, which will enter into force on 2016 January XNUMX, according to the Governor, it will have to be applied “taking into account the need to protect creditors and, at the same time, guaranteeing financial stability; it will have to be done so that recourse is had to be made only in limited and extreme cases. The bankruptcy hierarchy will in any case be respected and creditors will not have to report losses greater than those they would suffer if the bank, in a state of collapse, were liquidated according to ordinary procedures”.
Deposits of up to 100 thousand euros, Visco recalled, "will be protected up to 100 thousand euros", while those above this threshold will receive "preferential treatment compared to the bank's other liabilities. Therefore, the probability that they will be affected in the resolution of a crisis is low”.
BRUSSELS GIVE LEGAL CERTAINTY TO BANK RESCUE PLANS
The bailout plan for the banks developed by the Interbank Deposit Guarantee Fund “is today being questioned by recent guidelines from the European Commission offices that deal with state aid – continued the number one of Via Nazionale -. It is desirable that the European authorities promote coordination and legal certainty in the application of the provisions on competition and those on bank resolution".
POP VICENZA: GOOD INCREASE GUARANTEED BY A CONSORTIUM
"The successful outcome" of Popolare di Vicenza's capital increase "is ensured by the presence of a guarantee consortium", the Governor said again, underlining that "the intervention carried out by Bank of Italy inspectors revealed behaviors not in line with with the norms. The Bank of Italy and the ECB, in full agreement, already following the first evidence that was emerging from the inspections launched last February, have urged the Popolare di Vicenza to adopt immediate corrective measures: the top executive was replaced and almost all of the first managerial line; a capital strengthening plan has been defined” and “a radical corporate governance reform project is envisaged, with the transformation of Popolare into a joint-stock company and the simultaneous listing on the Stock Exchange”.
VISCO: CORRECT SUPERVISION, BAD MANAGEMENT FIGHTED
Banks, according to the Governor, "must ensure that the liquidity services included in the current account advances are charged at a price that does not exceed the value of the service actually rendered - added the number one of Palazzo Koch - and that also takes into account the indirect advantages that the banks themselves obtain from the offer of these services”. The Governor added that banks obtain additional information from liquidity management towards SMEs, "mitigating the risks associated with the difficulties and uncertainty of credit recovery times".
The "single, serious, mismanagement" episodes that have emerged in the Italian banking sector in recent years "have come to light with the contribution, in most cases decisive even if not always recognized, by the Bank of Italy - specified Visco -. The system as a whole, despite the recession, despite the incorrect behavior held. I am confident that banks, good credit and good finance will make an important contribution to economic recovery, a recovery that needs to be consolidated and strengthened”.
With reference to his involvement in the investigation into Banca Popolare di Spoleto, Visco guaranteed "dutiful respect for the action of the judiciary, in which I have the utmost confidence". The work of the Bank of Italy's supervisors, he added, has always been "legitimate, correct and shrewd".
PADOAN: THE GOVERNMENT THANKS BANKITALIA AND VISCO
The solidarity of the Minister of the Economy, Pier Carlo Padoan also went to Visco: “My thanks go to the Bank of Italy and the Governor and that of the government – said the number one of the Treasury again during Savings Day -. An effective, continuous and widespread supervisory action by the Bank of Italy remains a structural element for the success of the strategy for economic recovery”.
