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Italian Bank Loans Plunge By Record; Lenders Say "No Cause For Alarm"

Tyler Durden's picture


While Italian bank and sovereign bond markets have showed a little weakness in recent weeks, they remain largely in limbo - supported on one side by an inexorable promise by ECB's Draghi outweighing the crushing reality of economic fundamentals. The transmission mechanism, claimed to 'fixed' by Draghi, is simply not. In fact, as the ABI notes, loans to families and companies dropped by record amounts in January. As ANSA reports, the continuing recession is not only weighing on loan demand but banks are unwilling to lend their ECB-funded reserves as delinquent loans continue to surge year after year (at record highs up over 16% YoY). Deposits rose - theoretically a positive - and yet as we have noted this is a preference for liquidity not a signal of confidence in Italian banks. However, all this terrible news, weakening economic climate, and plunging credit creation is described by the Banking Association as "no cause for alarm." Phew...


Italian bad loans soaring...


Via ANSA.It,

Loans to families and companies dropped by record amounts in January, Italy's banking association ABI reported Tuesday, adding that it expected the country's economy to contract even more than it previously forecast.


According to ABI the value of total loans issued, 1.467 billion euros, represented a 2.5% drop on the December value and was largely the result of the continuing recession in Italy.


Meanwhile, for the current year ABI researchers said their forecasts of a 0.6% contraction in the economy would likely be revised for the worse after a higher than expected contraction of 0.9% in the fourth quarter of 2012. On this basis, and unless the government takes any measures to stimulate growth, the economy could be on track to shrink by about 1%, ABI said.


The banking association also warned of the increasing amount of potentially dud loans in the financial system - another result of the continuing poor economic climate in Italy - but added there was no cause for alarm, as the increase was "physiological" and "could be managed".


According to ABI, the total value of bad loans reached a net value of some 64.3 billion euros at end 2012, representing about 3.3% of total bank lending, up from about 2.7% to the end of 2011.


Meanwhile, ABI said that bank deposits continued to increase in January, up 6.8% on December, reaching some 1.2 trillion euros.


The January growth rate marked an acceleration with respect to December's +6.2% reading.


ABI said the increase in bank deposits is likely a result of consumers' preference for liquidity in the current recessionary climate.


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Tue, 02/19/2013 - 12:35 | Link to Comment midtowng
midtowng's picture

This only means that families have more money to spend on consumer goods, since they aren't paying interest on their loans.


Tue, 02/19/2013 - 12:45 | Link to Comment butchee
butchee's picture

Also, there will be less nonperforming loans in the future.

Even more bullish!

Tue, 02/19/2013 - 12:36 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Wait what, debt is no longer money?  I won't hold my breath.

Tue, 02/19/2013 - 12:37 | Link to Comment Hopium Dealer
Hopium Dealer's picture

I personally can't wait til Bunga Bunga gets re-elected. That's when the real comedy starts.

Tue, 02/19/2013 - 12:39 | Link to Comment Squid Vicious
Squid Vicious's picture

Bullish! I think we'll see 1530 on the S&P this year... oh, wait

Tue, 02/19/2013 - 14:14 | Link to Comment mirac
mirac's picture

your name..."Squid viscious"...cracked me up!

Tue, 02/19/2013 - 12:42 | Link to Comment kliguy38
kliguy38's picture

Remain calm and seated...there is nothing to worry about. Just close your eyes and repeat after me......Who's your daddy??? Ben's my daddy...

Tue, 02/19/2013 - 12:45 | Link to Comment They Tried to S...
They Tried to Steal My Gold's picture

I'mn utterly blown away how the bad news is now coming in waves - not one or two. Based on this - the Crash will begin with not One but a multiple of Black Swans -all in either resulting from eaach other or within short term closely linked time frames...



Tue, 02/19/2013 - 12:46 | Link to Comment Fips_OnTheSpot
Fips_OnTheSpot's picture


Tue, 02/19/2013 - 12:46 | Link to Comment Yen Cross
Yen Cross's picture

 Need new [tapebombs]... Draghi you village idiot!

Tue, 02/19/2013 - 12:47 | Link to Comment jubber
jubber's picture

ftsemib only up 250 points today, and that piece of crap Paschi up 3.5%  go figure

Tue, 02/19/2013 - 12:51 | Link to Comment ziggy59
ziggy59's picture

The size of the Panic Button grows daily...

Tue, 02/19/2013 - 12:51 | Link to Comment Smuckers
Smuckers's picture

Tell that to the horses.


Tue, 02/19/2013 - 12:55 | Link to Comment Jason T
Tue, 02/19/2013 - 12:57 | Link to Comment medium giraffe
medium giraffe's picture

"This morning's unprecedented solar eclipse is no cause for alarm."

Tue, 02/19/2013 - 13:00 | Link to Comment Iocosus
Iocosus's picture

The forex market likes the kool aid. From now on, whenever bad reports come out, I'm buying the EUR/USD. Black is white...

Tue, 02/19/2013 - 13:02 | Link to Comment Goldenballs
Goldenballs's picture

Figures look terrible but the Italian economy is probably one of the leading lights when the real truth comes out about the rest of the world.

Tue, 02/19/2013 - 13:19 | Link to Comment W74
W74's picture

The first nail in the coffin will be pounded through Copenhagen.

Tue, 02/19/2013 - 17:00 | Link to Comment Whizbang
Whizbang's picture

You have me interested. What makes you say that?

Tue, 02/19/2013 - 13:05 | Link to Comment PAWNMAN
PAWNMAN's picture

They have no choice but to lie at this point. The powers that be are just buying time, building up ammo surpluses, portable roadblocks and coffins to handle the coming chaos. Time to formulate the plan to take over the local Costco.

Tue, 02/19/2013 - 13:49 | Link to Comment Trader47
Trader47's picture

This the best news of the day, watch out Bernanke!!!!!!!!!!

Tue, 02/19/2013 - 13:59 | Link to Comment Super Broccoli
Super Broccoli's picture

we live in such a fucked up world !

when you put money on a bank account you get a negative real interest rate when not simply negative ... and yet the sheeple are depositing massively because they are scared of ... damn ! the bank crisis !

it's like being scared of flying and training to be a pilot !

Tue, 02/19/2013 - 16:47 | Link to Comment Goggles Pisano
Goggles Pisano's picture

Bank loans are down, but loans from "No Neck" Sal and Vinny "Two Times" are up 300%.

Tue, 02/19/2013 - 18:55 | Link to Comment skydrake
skydrake's picture

Is it a bad news?

"Italian bank lending drops to record low"


"Italian bank lending hits to record high"


Which is better?

Tue, 02/19/2013 - 22:24 | Link to Comment Notarocketscientist
Notarocketscientist's picture

If more loans is the answer then just allow people to lie about their incomes ....  give them up to 1M Euros at low interest .... and send them away. 

This will be HUGE for the economy as they spend that cash.  Don't worry about the banks bad loans - you just have to print money to make them good.

Oh... you say that's already been tried?  Where?

Yes of course - Liar Loans in America. 

But that has worked out just fine - the US is in recovery.

The EU needs to learn from America

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