The Embassy of Italy in London hosted on 27 June “What’s next in the Italian banking landscape?”, an event organised by BonelliErede, a major Italian law firm with offices in the UK, Belgium, Egypt and Ethiopia.
The speakers were Massimiliano Danusso, managing partner at BonelliErede’s London office; Giorgio Gobbi, head of the Financial Stability Service at the Bank of Italy; Giuseppe De Martino, senior advisor at the Ministry of the Economy and Finance; Marco Spano, managing director of Mediobanca; Biagio Giancalone, executive director at Intesa Sanpaolo; and Marco Passalacqua and Giuseppe Sacchi Lodispoto, both partners at BonelliErede.
The ambassador, Raffaele Trombetta, gave an opening address in which he highlighted Italy’s reforms in the banking sector and the opportunities offered by investment in Italy.
The panel, moderated by Emanuela Da Rin of BonelliErede, discussed the extension of Italy’s Securisation Guarantee for Non-Performing Loans (GACS) scheme; the reform of the country’s bankruptcy law, which will come into force in August 2020: and the Growth Decree, which had been approved by the Senate earlier that day.
The speakers discussed the important role of reforms in sustaining the Italian banking system and the country’s financial stability. They particularly highlighted the role of the GACS in making the banking market more competitive and in attracting investment: the scheme, which insures nonperforming bank loans, has proven to be an efficient instrument in dealing with the issues caused by banks’ exposure to NPLs.
They also discussed the possible extension of state guarantees to loans that are unlikely to perform (UTP). They observed that there is not yet a secondary market for this category of NPLs and that the creation of such a market would require detailed analysis of the ability to recover credit on loans of this type. They also noted that it would contravene European regulations to apply the guarantee scheme to UTPs.
They then examined the new, completely revised, bankruptcy law, which allows rapid restructuring of businesses. The new law makes it possible to intervene more rapidly in crisis situations thanks to an alert procedure that relies on close monitoring.
The final topic of discussion was the Growth Decree and how it will be able to integrate the reform on securisation of deteriorated loans, introducing the protections necessary to create a secondary market, from scratch, for NPLs.
It was clear from the discussions that Italy provides a valuable example of banking reform. The country enjoys greater diversification of investment than do its European counterparts; the securisation of deteriorated loans is above the European average; and the rate of default is back at pre-crisis levels. Although there is still room to improve the general efficiency of the system, in recent years Italy has shown itself to be a clear leader in banking reform.
