Home » SVB-Credit Suisse risk on Italian banks? Fabi replies

SVB-Credit Suisse risk on Italian banks? Fabi replies

by admin
SVB-Credit Suisse risk on Italian banks?  Fabi replies

Italian banks: what they risk after the Svb crash and the Credit Suisse case. Fabio’s analysis

Fabi answers questions about the Italian banks that are crowding the minds of account holders, investors, traders:

to what extent the institutions are armored by the problems that, in the space of just two weeks, knocked out the two American banks Silicon Valley Bank e Signature Bankforced Switzerland to orchestrate the rescue of Credit Suisse knocking on the door of rival UBS, and sunk – it’s today’s news – the shares and bonds of Deutsche Bank?

There is decidedly too much meat in the fire, and being able not to get overwhelmed by anxiety is not a trivial matter, at a time when we are once again talking about Lehman event risk , AT1 bond worth billions of dollars pulverizedand now also of the surge of the credit default swap on the bonds of the first bank in Germany.

But Fabi, the Italian union of bank workers, reassures Italians about the health conditions of Italian banks, answering the questions that are bothering operators with the presentation, also, of some tables, which compare the made in Italy institutions with those of Germany, France, Spain, Portugal, Greece, Austria, Finland, Netherlands, Belgium, Luxembourg e other countries in Europe.

“Can the crises of Silicon Valley Bank and Credit Suisse be replicated elsewhere? – asks Fabi, immediately answering the question – Significant impacts in Italy are almost impossible“.

READ ALSO

Italian banks: the post-SVB deposit flight risk

Capital ratios, profitability and liquidity ratios give an even more precise cross-section of our country’s banking industry’s ability to withstand financial shocks – reads the Fabi analysis – From the numbers of the main Italian credit institutions, more than positive and reassuring indications emerge in terms of capitalisation, quality of credit and profitability”.

In particular, “Italy boasts a Roe (return on equity) higher than the European average, a Cet1 which stands on average at 14.7% compared to the 8% established as a minimum value by the ECB e a Tier1 al 16,2%”.

Moreover in Europe and Italy Banks and banking regulators themselves have learned the lessons of the 2008 global financial crisis:

See also  Anyuan Coal Industry: Subsidiary Shangzhuang Coal Mine resumes production_Oriental Fortune Net

“The Supervisory Authority of the European Union and the financial authorities of the Old Continent, which have more stringent regulations and impose different and greater controls than those of the two countries of the failed institutions, have treasured what happened with the previous global crisis of 2008 and they have expanded their work, asking banks above all to strengthen their capital position and liquidity requirements”.

A “sacrifice”, underlines Fabi, “which lasted for years, but which today bears fruit: credit institutions in the euro areawhich by the way are not present at all in Silicon Valley Bank, are solid and less exposed to the financial turbulence of these days”.

The numbers speak for themselves and are summarized in some tables they present data from the ECB that were processed by Fabi.

Comparison with banks in Germany, France and Spain

It is highlighted by analyzing the first four countries in which significant banks stand out, i.e Italy, Germany, France and Spain, that “Italy with 12 significant banks is in fourth place for total assets (2.8 billion euros) and for profits (12.87 billion euros), with a roe (return on equity) of 8.95 %, above the EU average”.

It’s France which wins the highest values: compared to ‘only’ 10 significant banks, it has assets of 9.47 billion, profits of 25.11 billion with a roe of 6.21%, albeit almost two percentage points lower than the data from Italy.

There is then Germany (21 significant institutions), which “records assets of 5.3 billion, profits of 10.06 billion, with an even lower ROE, at 5.19%” and, “before Italy, by assets (3.87 billion) and profits (17.81 billion), ranks Spain, which collects a roe of 10.53%”.

Fabi explains that the solidity of European banks is not confirmed only by the “capital ratios and profitability”, given that “the numbers of the main Italian credit institutions reveal more than positive and reassuring indications for the sector”.

And this is how it is noted that the Italian banks, characterized by a “mass of assets equal to half of the German one and about a third of the French one” boast “a roe (return on equity) not only higher than the European average, but also to the main competitors in the euro area (Italy: 8.95%, European average: 7.50%).

See also  The stock exchanges today, 7 January. EU price lists contrasted, waiting for US labor data

This, compared to “a relative percentage of cost/income ratio equal to 64.2%a Cet1 which stands on average at 14.7% compared to the 8% established as the minimum value by the ECB and a Tier1 at 16.2%”.

The union recalls that among other things, in some cases, “the capital ratios of smaller Italian banks reach much higher values, testifying that even small companies have strengthened their assets to face any other systemic crises”.

“Going back to the big banking groups – continues Fabi’s analysis – values ​​similar to Italy are found in Germany (cost/income at 69.2%, Cet1 at 14.9% and Tier1 at 16.1%) and in France (cost/income at 67.9%, Cet1 at 15% and Tier1 at 16%)”, while “Spainshows more ‘fragility’ while remaining on values ​​sufficient to respond to any crises, but decidedly lower than the other three nations: the cost/income ratio is 49.8%, Cet1 at 12.5% ​​and Tier1 at 14%.

The NPL factor of Italian and European banks

There are then ratios relating to NPLs and liquidity.

In this context, emphasis is placed on the positive consequences of derisking policies activated by Italian banks, which allowed the ratio between total loans and non-performing loans in Italy to settle at 2.6%.

The data practically shows that “Italian banks boast a solid and robust liquidity profile, with an indicator (Lcr ratio) of 176%, far from the minimum 100% established by the Basel rules. The latter stands at 147% for Germany and France and 193% for Spain”.

Regarding the “ratio between loans and NPLs, for the most important German banks it is 0.93%, for the French 1.8% and for the Spanish 2.7%, while for the Italian ones it is 2.6%”.

Thus the general secretary of Fabi, Lando Maria Sileoni:

“The financial soundness of Italian banks depends on three crucial factors: the effective supervisory rules and controls, the professional quality of the top management of the groups and the resilience ensured by the male and female workers who, with their commitment, seriousness and spirit of self-sacrifice, have made a formidable contribution to the maintenance and stability of the Italian banking sector in a period of profound transformation not without uncertainties, both those related to the pandemic and those deriving from the war in Ukraine. This is a fact, a merit that will be adequately recognized by the banks, also from an economic point of view, on the occasion of the renewal of the national collective labor agreement which will be at the center of the next negotiations. The work has allowed Italian banks to make an extremely significant qualitative leap from all points of view: for the liquidity ratios, the goodness of the assets and the level of profitability, all three above the European average”.

Fabi’s report arrives on the very day in which the markets already tormented by the banking crises that exploded in the United States and in Europe itself found themselves having to deal with the domino effect on bank stocks of the collapse of Deutsche Bank .

See also  EU plans stricter cybersecurity rules for US cloud providers

Also Credit Suisse from UBS sad protagonists of the banks made in Europe have been confirmed, even if for issues related rather to the alleged aid provided to the Russian oligarchs friends of Vladimir Putin affected by Western sanctions.

The collapse of Deutsche Bank sent the European stock exchanges to sink, which then managed to stem the damage after the announcement came from the German bank itself, which surprisingly, in the midst of the panic that was already affecting its shares, announced a plan to buy back some of its riskier bonds, Tier 2 bonds, on May 24th.

The news sparked buys on bonds which, according to what was reported by the Wall Street Journal, rebounded this morning up to 99 cents on the dollar, from 90 cents at the beginning of the week. From here to say that the worst for American and European banks is over, there goes.

You may also like

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More

Privacy & Cookies Policy