Italian banks poised to shed assets as lending quality falls to decade low
16 August 2012
Italian banks have an estimated €281 billion of non-performing loans (NPLs) and non-core assets on their balance sheets according to a new report from Deloitte, the business advisory firm. ‘The Italian non-performing loan survey: Outlook for 2012-2013’, focuses on non-performing debt and whether Italian banks will divest these assets.
Almost three quarters (70%) of respondents expect the volume of non-performing loans held on their balance sheets to increase in 2012 and 75% of respondents expect to sell NPLs in 2012-13. The survey comes after the Italian Banking Association recently announced that the volume of bad debts as a percentage of total private sector lending is at its highest level since 2000.
The survey of senior bankers in major financial institutions in Italy included chief executive officers, chief financial officers and heads of restructuring. The combined asset base of the banks surveyed is around €1.7 trillion and their combined non-performing loans totalled €100 billion.
Jon Daniel, director in Deloitte’s portfolio lead advisory team, comments: “As with many European banks, the Italian banking sector continues to face a series of challenges, particularly with fears of contagion from Greece and Spain; lower returns on equity; increased bad debts and tighter supply and demand of credit.
“NPL divestment by Italian banks has been limited with the price gap (between a buyer’s price estimate and a seller’s price estimate) continuing to be a barrier. Our findings indicate that the majority of banks will be looking to offload NPLs, with the sale of corporate NPLs being the most likely, as Italian businesses continue to struggle with the slow economic recovery and reduced supply of credit.”
Note to editors
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.
Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.
The information contained in this press release is correct at the time of going to press.
Member of Deloitte Touche Tohmatsu Limited