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What are the risks facing the creditors of Italian banks? Since the resolution of the four Italian banks under special administration, which led to losses for bondholders, interest in the topic of bail-ins has risen greatly. The results of Prometeia’s analysis are reassuring, even when very extreme scenarios involving huge losses for the main banking groups are simulated.
Most of the net resources used by the new ‘Stability Law’ will be used to avoid the tax increases laid down by the deficit safeguard clauses, that is, to avoid asking households and companies to “put their hands in their pockets”. Without, however, putting any new cash in those pockets. Is this enough for this budget to be considered expansionary? We believe it is, up to a point. Meanwhile, available indicators suggest budget figures in line with their targets. This is not just thanks to the government.
Improvement in the Italian position in the European programme providing funds for research and development projects. Substantial participation of private companies and strong focus on the issues related to the fourth industrial revolution.
With an estimated 266 billion barrels of oil reserves, the Saudi national oil company would be a giant among public companies: but what would induce Riyadh to sell off its prize asset, now that crude oil (and therefore the value of the asset) is at a ten-year low?
The conversion of the “popolari” banks, the Italian co-operative banks, into joint stock companies could mark the beginning of a new season of bank consolidation, which might involve other credit institutions, as well as the popolari banks. This consolidation is expected to produce significant cost synergies, which, once fully realised, may bolster the income statements and the balance sheets of the new banking groups.
Positive financial results in the first nine months of 2015 for the leading groups listed on the stock market. Aggregate profits more than double on an annual basis as loan impairments sharply decrease. Loans to customers broadly unchanged since the beginning of the year.
The crisis in emerging countries is slowing the recovery of the Italian economy. Even so, exporters to Russia and China are well-equipped to handle a drop in demand.
The wholesale bank funding market has opened up further, especially for covered bonds, instruments which have traditionally paid low yields. As the introduction of the bail-in nears, unsecured bonds are showing a few signs of increases in costs, which seems to have also slowed issues. However, the MREL is also waiting in the wings, which could somewhat require a different funding mix.
Our indicator of systemic risk (SRISK) indicates an expected capital shortfall in the leading Greek banks of approximately €14.5 billion, in line with ECB estimates and below what has been disbursed in the third plan of financial assistance to Greece.