«The positive accounts do not depend on the rates. Now there is a risk of crisis for businesses»- WWN

“We are supervised by the ECB and the Bank of Italy with very tight links. It is clear that when the meshes tighten one has some fatigue reactions because the objectives must be achieved, but the crises overseas and in Switzerland have proved the ECB and the Bank of Italy very right and highlighted the efforts of the Italian banking system which it was not shaken”. This was stated by the president of Abi, Antonio Patuelli, participating in the June 4th Festival of the Economy in Turin.

Positive bank balances do not depend on interest rates

Then, with regard to interest rates and the Italian banking system, Patuelli warned: “Do not make the mistake of thinking that the 2022 final balances of the banks, for those that have had positive or very positive results, depend mainly or exclusively on the The increase in interest rates which took place from July onwards would make a strong conceptual mistake”. Because “those results were already ‘in a nutshell’ highlighted in the half-yearly reports of 2022 because in the first months of 2022 it’s not that the banks did very badly and it’s not that they did very well just because the interest rate trend changed from the second half of July, it would be an unjust, ungenerous, incomplete and very partial view”. An honest judgment recognizes that in the past years there have been “very strong capitalization operations of the banks with gigantic capital increases, secondly there have been very strong provisions and thirdly, but not least, very strong restructuring of banks, some even with conspicuous early retirements, with even painful closures of branches that tend to reduce costs”, he said again. For businesses, however, things are different: “they saved before and pay more now. They have not planned the cost linked to higher rates and there is a risk of new corporate crises with a deterioration of credits”, Patuelli explained, underlining the need to prevent increases by setting aside profits.

Rates that are too high are a risk for businesses

“Companies have not made long-term plans with the forecast of costs adequate to liquidity. The danger is that if rates were to remain at these levels or even higher for a long time, this could lead to business crises and the deterioration of non-negligible parts of bank credit”, said the president of ABI. “Many companies and many citizens have been accustomed to zero rates, which have been at zero for six years and zero point in the other four, and have not calculated the estimates of the costs of mortgages and loans that have contracted at variable rates in the zero years,” Patuelli explained. “It is true that 63%, given by Bankitalia, of mortgages in Italy are fixed rate and therefore the increase in rates is a cost for the banks and not for the customers, but 37% of the companies that have gone to the variable they have saved in the previous years, one or ten or twenty, but they pay more now and if they have not programmed this cost they risk having difficulties”. For this reason “we have the prospect of new corporate crises and when there are corporate crises there are credit deteriorations and we banks must beat the credit deterioration but also prevent its effects by setting aside more profits”.