Saturday, July 30, 2016
At the European stress test cut Italy’s banks, although better than expected, but the crisis bank Monte dei Paschi gets a particularly bad witness. The banking crisis is far from over, and Prime Minister Renzi is still under pressure.
Italy’s largest problem child had taken precautions. Not even an hour before the publication of the stress test results presented the ailing bank Banca Monte dei Paschi di Siena (MPS) a multi-billion dollar rescue plan. Shortly thereafter, it was clear that the ailing MPS receives as expected the worst witness in the stress test. Although the money House wants to tackle its difficulties and the other Italian institutions not as bad as feared sections: remain the fundamental problems of the banking sector. The Monte dei Paschi, founded in 1472 its intention to deliver more than half of their bad loans and implement a capital increase of five billion euros. The mountain of bad loans totaling about 360 billion euros is one of the biggest problems of Italian banks. The value is about one third of all these loans with high default risk in the EU and is also a legacy of the years of recession, the consequences of which the third largest economy in the euro zone still groaning.
“In Italy the banks continue to suffer from the economic crisis of the country. There is no growth in order to achieve income and compensate for losses from bad loans. This problem persists, “said Martin Hellmich, banking professor of risk management at the Frankfurt School of Finance. Banks are stuck in a vicious circle: In their situation they can not grant new loans, which economic growth slows. But just the money houses are in turn dependent on a strong economy in order to strengthen their balance sheets on their own. Also Philipp Wackerbeck, strategy consultant and banking expert at the accounting firm PwC, said: “However, the Italian banking crisis is not so survived the market will continue to exert pressure on them to clean up their balance sheets..”
In the stress test in 2014 were nine Italian banks flunked. Here is little happened in the aftermath to the limitations of the Institute, criticized Michael Kemmer, CEO of the private bank association BdB. The expert Daniel Gros and Willem Pieter de Groen from the Brussels think tank CEPS judge: “The Italian banks have failed in all previous European stress tests since 2010 or were very close.” Analysts see more profound problems in Italy. In many places there are years of mismanagement and nepotism, for no one will be held accountable. In addition a lot to lax lending, beyond the banking sector is completely oversized, highly fragmented and inefficient. Policy and banks are closely intertwined in Italy together – from a banking crisis can therefore also quickly become a national crisis
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The problem of banks therefore employs Prime Minister Matteo Renzi and his government for months. Renzi is domestically under strong pressure, top priority for him to spare small investors in possible bank bailouts – but this is contrary to the EU rules. Last year brought in Italy a pensioner around who had lost all his savings in a bank rescue – and many voters gave the government the blame
In Brussels and other European capitals growing fear a politically unstable. Italy. In the fall of the important referendum on the planned constitutional reform is at that Renzi has linked his own fate. In case of defeat Renzis Italy could elections threaten -. A nightmare scenario for the EU, since then could possibly get the european critical and completely unpredictable Five Star Movement to power