Bank of Italy forecasts state could bring in €9.9 billion over time from Veneto banks | bambinoides.com

Bank of Italy forecasts state could bring in €9.9 billion over time from Veneto banks

 

In the best scenario, the Italian state could emerge from the liquidation of the Veneto banks with up to €1 billion more than the amount it commits, according to Bank of Italy analysis. Prime Minister Paolo Gentiloni insisted: “The intervention of the government was not just legitimate but also appropriate”

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Gianni Trovati –

In the best scenario, the Italian state could emerge from the liquidation of the Veneto banks with up to €1 billion more than the amount it commits. This potential scenario is included in the technical report for the decree which reached the Chamber of Deputies yesterday. The final balance will depend on the capacity of the Sga vehicle that will take on the deteriorated credit to meet its recovery objective. Bank of Italy analysis shows this could bring in €9.9 billion over time: €4.2 billion from bad loans and €5.4 billion from unlikely to pay loans plus €300 million from foreign assets.

The debate heated up immediately on the numbers and costs of the operation, and promises to lead to lively discussions in parliament, where the smooth passage of the decree is an essential condition to be able to complete the plan. Prime Minister Paolo Gentiloni intervened again to reject recent criticism: “The intervention of the government was not just legitimate but also appropriate, and is aimed not at those responsible for the disarray but at others: the two million clients, the small and mid-sized companies and the economy of the region,” he said.

The president of employers’ association ConfindustriaVincenzo Boccia followed the same line, thanking the chairman of Intesa Sanpaolo Gian Maria Gros Pietro and speaking of “a courageous act of the government and a big financial institute which has allowed these banks to not create an effective panic.” Boccia rejected the “lessons of an international community that used €300 billion to save its banks and is now trying to moralize with us.”

Let’s go over the numbers at the base of the complex structure of the decree that regulates the operation negotiated with Intesa and EU authorities. On the side of outgoings, it is necessary to distinguish the immediate spending of the state and the overall commitments.

The immediate spending, financed with a part of the €20 billion of public debt included in the decree that started the negotiations for the recapitalization of Monte dei Paschi, totals €5.2 billion and is divided in two tranches: €4.8 billion to reinforce capital and guarantee the neutrality of the operation for Intesa Sanpaolo’s capital ratios, avoiding ECB requests for a capital increase. The other €400 million will finance guarantees and further risk coverage for Intesa.

For the chances of recovering the €5.2 billion, Economy Minister Pier Carlo Padoan said he was “very confident, because the total of the assets placed in the bad bank is higher and the morale of markets will improve, as is happening today (yesterday for readers) and that will strengthen the value of the NPLs.”

The total commitment is worth €10.6 billion. To immediate spending you have to add the €5.4 billion losses in the accounts of the two banks. The latter does not transform into spending because it is covered by the assets of the two banks.

Deteriorated credit makes up the assets of the liquidation, which will be transferred to the Sga, the old bad bank of Banco di Napoli that the treasury acquired from Intesa Sanpaolo one year ago, so that it could handle new deteriorated credit.

The Sga will have the task of replicating the results obtained over 20 years of managing the collapse of Banco di Napoli, which led to a liquidity of almost €600 million for the Treasury. According to the Bank of Italy, the conditions are there: the deteriorated credit is worth €17.6 billion and the recovery of €9.9 billion is possible. Added to the €1.7 billion of equity and stakes, that would take the total to €11.6 billion: €100 million more than the €10.6 billion committed.

 


Gianni Trovati  | italy24.ilsole24ore.com


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