Italy wants to further support its banks in the face of growing financial risks, according to a Handelsblatt report.
However, the conditions will also have to be tightened in line with EU requirements, various people familiar with the Italian government’s plans told Reuters. In fact, the current system of state guarantees for the sale of red loans by banks will expire in mid-June. However, Italy now wants to extend it and is seeking the approval of the EU Commission.
The aim is to make it easier for banks to sell bad loans. Since 2016, loans of almost 100 billion euros have passed under the protective umbrella of the Italian state. The state guarantees investors the repayment of less risky loans, which in turn makes it easier for banks to get rid of them.
It is true that extensive state aid during the Corona crisis has driven corporate bankruptcies to low levels, making bankruptcies relatively rare. However, this aid, which was granted through the banks, must now be repaid in the coming years, which could also increase the pressure on the banks.
According to confidential information, the state guarantees for part of the loans are now going to be extended. However, in view of the necessary yes from the EU, the creditworthiness requirements of the loans are going to increase, in order to reduce the risk for the taxpayers.
Source: Capital
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