Why Italy's problems are Europe's problems

摘要

The Italian banking sector is again in turmoil. The boaxd of Carige, a medium-sized and mostly local commercial bank headquartered in Genoa, has recently been removed by the European Central Bank (ECB). Management powers have been assigned to the previous chairman and CEO of the bank and to a third legal expert appointed by the Bank of Italy. Their task is to either sell the bank or walk a narrow path between nationalisation and resolution. Another medium-sized bank, Popolare di Bari, is also in trouble, due to a high percentage of non-performing loans (NPLs) and the need to raise capital. These are setbacks to the progress achieved between 2017 and mid-2018, when one of Italy's largest lenders, and its oldest, Monte dei Paschi di Siena, was recapitalised with public money, and two medium-sized banks in the wealthy Veneto region were taken over by Intesa Sanpaolo, the country's largest banking group, after being 'cleaned' of bad debt. Lower domestic growth and a riskier international scenario (as forecast by the International Monetary Fund) will only make matters worse. Growth in Italy has been below the eurozone average in the past 25 years, due to low productivity in services, inefficient public administration and a specialised manufacturing sector that has been badly hit by stronger global competition. After the financial crisis, Italy lost about 10 % of gross domestic product (GDP) in real terms and experienced both a rapid increase in its already high debt-to-GDP ratio (currently about 130%) and troubles in its banking sector.