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Italy – Non-Performing Loans Hit A New Record High
Submitted by Pater Tenebrarum via Acting-Man.com,
While all Eyes are on Greece, Italy’s Banks are Drowning in Bad Debt
The real danger to the euro area probably doesn’t emanate from Greece, but from two of its heavyweights, namely France and Italy. A small note in the European press reminds us that all is not well in at least one of these countries, least of all with its banks (currently this is only a “page 16 story”, but it has great potential to eventually move to the front page).
Regional distribution of non-performing loans in Italy
The note reads as follows:
“Rome – because of the recession of recent years and corporate bankruptcies, the total of bad loans has continued to rise in Italy. According to Italy’s banking association ABI, non-performing loans amounted to 193.7 billion euro in May, 25.1 billion more than in the same month in 2014. This is the highest level since 1996.
Non-performing loans represent 10.1 percent of all loans granted by Italian banks, ABI said on Tuesday. Especially small and medium enterprises continue to be under pressure due to bad loans, so will take a long time before banks will see the bad loan situation ease, the ABI report stated. Italian companies are currently struggling with the effects of the longest economic crisis since World War II and are therefore often no longer able to service their loans.”
(emphasis added)
If our calculator can be trusted, this means that bad loans in Italy’s banking system have increased by roughly 14.9% over just the past year – by no means a peak crisis year, although Italy’s listing economy continued to contract slightly.
As the following chart shows (unfortunately we were only able to obtain this slightly dated version), Italian NPLs stood at € 165 bn. in Q1 2014. However, to this one must actually add all sorts of loans that are otherwise delinquent/dubious or sub-standard, but haven’t yet reached “full” NPL status. These are summarized together with NPLs under the term impaired loans below.
The growth of impaired loans in Italy’s banking system until Q1 2014. At the time, NPLs stood at €165 billion – now they are towering at nearly €194 billion.
While Italy’s banks are drowning in NPLs and otherwise impaired debt (from the above one can probably infer that the new total is close to €350 billion), its government is buried under ever more debt as well. Of course, the government’s debt is considered “risk-free” in the Bizarro universe we have entered since the ECB has decided to join the global printathon. Note that we are dating this ECB decision to late 2011, as its money printing efforts started well before it announced full-blown “QE” (previously there were LTROs, TLTROs, several covered bond purchase programs, an ABS purchase program, the SMP and the as yet unused threat of “OMT” or “outright monetary transactions”).
The trend in Italy’s general government debt – it remains a one-way street.
However, Italy is not the worst country in the euro zone with respect to bad loans in the banking system. The next chart shows the percentage impaired bank loans (loans that are delinquent 90 days+) represent of total bank loans outstanding in a number of countries.
Not surprisingly, Greece is inhabiting the top spot, followed by Ireland, Slovenia and Italy. In most of these countries a variety of measures has been taken (mainly via the creation of “bad banks”) to get the problem under control. Italy seems to largely have disappeared from the radar, but strikes us a potential powder keg – especially once the recent monetary-pumping-induced pseudo recovery implodes in another bust.
Bad loans as a percentage of all outstanding bank loans in various countries
Conclusion
If one thinks things properly through, Greece is really a side-show. The euro zone remains full of accidents waiting to happen and some of them have the potential to become truly gigantic accidents. Italy has a twin debt problem and it is probably only a question of time before its giant government debtberg becomes a concern again – this would put the country’s banks into an untenable situation, given they have amassed a great deal of government since early 2012.
As long as the ECB continues to pump €60 billion in newly created money into the system every month, such problems can probably be kept at bay. However, this comes at a price, as monetary pumping distorts prices and falsifies economic calculation, which in turn leads to malinvestment and capital consumption that is masquerading as an “economic recovery”. The structure on which all this debt rests becomes ever weaker.
What will happen when the pumping eventually stops?
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Just try and give 'em the boot. Ya, just try...
Uhhhhmmmm.......Latin language based European countries will cause the breakup of the European Union.
"Accident" implies unintentional, unforseeable and inadvertent.
This was no Accident...
Well look at that -- IMF agrees with little ol' Haus-Targaryen -- those with colder climates perform better economically than those with warmer climates.
Waiting for Ghordo to tell me I'm wrong, and average temperature has nothing to do with it.
"Rome is on the verge of collapse," Giancarlo Cremonesi, the president of the Rome Chamber of Commerce, told Reuters. "It is unacceptable that a major city which calls itself developed can find itself in such a state of decay."
https://ca.news.yahoo.com/glory-faded-decaying-modern-rome-needs-miracle...
Italy's national debt hits new record in May. Now at 2.218 trillion Euros
"Rome, July 14 - Italy's public debt hit a new record in May of 2,218.1 billion (2.2 trillion) euros, the Bank of Italy said Tuesday.
The debt rose 23.4 billion euros in the month of May alone because of increased Treasury liquidity, the fall in the euro and the conditions of the bond markets. The debt has risen 3.9% in the first five months of the year, the central bank said.
Italy's public debt is some 135% of GDP and is the second-biggest in the eurozone behind Greece's."
http://www.ansa.it/english/news/2015/07/14/public-debt-hits-new-record-i...
"Italy's public debt is some 135% of GDP"
Over 100% = bankrupt. Note that the US is over 100% too. Currency devaluation or debt haircuts are the two available options. Everything else is bullshit.
Yellen's printing press has a name. INFLATION.
If Italy takes a shit maybe I can pick up a villa around Tuscany somewhere cheap.....
I think we did have that conversation, not long ago. Yes, since the Industrial Revolution, cold temperatures seem to give some advantage. before, though, it was the opposite, or at least it is very well documented that the general opinion whas that northerners were lazy bums, throughout Europe and the whole of the Middle Ages and Antiquity before that
but isn't it completely against the theories of race or "Germanic" vs "Latin" cultures? and what happens when people work in air-conditioned environments?
actually, what is the experience in the US of A? arguably the very best place to find some data concerning this theory without concerns about cultural differences?
Ah Ghordius, : "US of A? arguably the very best place to find some data concerning this theory without concerns about cultural differences?"
No cultural differences between the (say) labor force of Michigan, Maine, and Oregon vs. Alabama and Mississippi?
Traveled in the US much?
The center of political and economic power in the USA shifted south thanks in part to air conditioning and DDT, but notice that spectacular growth didn't continue south of the US borders, even though A/C and DDT existed there too. Southern and western states had been established many decades before by independent minded people who had fled rigid and corrupt economies elsewhere, and so they had much lighter regulatory regimes, and they still do. Texas. Did I mention Texas? Its Senate and House only meet every other year and only for a Constitutionally limited time. Texans highly recommend that sort of reform to everyone, everywhere.
To illustrate what we mean about the place and rights of government, note that there are two lines for visitors to the impressive capitol building there. People without a concealed weapon permit go through a metal detector. There's a long airport style line. People like me flash our CHL card(looks like a TX drivers license) and walk by unmolested, our bags uninspected, then around freely with however many magazines of whatever capacity we prefer, one in the pipe or not, etc, with our without safety, as long as it does not show. I guess though that sept 1 we will be able to open carry on a holster. Compare and constrast with any old corrupt city up north, nevermind their capitol buildings.
Long story short, Texas honors the inalienable rights detailed in the Constitution more so than northern states and it shows. Economically of course, but also culturally.
It isn't so much the warm/cold weather as it is the prevalence of outdoor cats, which chase and kill rodents, which exposes the human populace to a parasite that modifies the brains of both humans and rodents. It makes both more impulsive, and weirdly, more attracted to .... cats. Antibodies to the parasite are much higher in southern european peoples. This is the mechanism.
"(Countries) with colder climates perform better economically than those with warmer climates." --Haus-Targaryen
So that's why those Antarcticans are on top of the world! Seriously though, Targ, it's long been known that national wealth is largely a function of distance from the equator. We studied that in geography 20-odd years ago, and it was old knowledge then.
I totally agree, warm climates promote lazy cunts.
today I bailed hay, just hit 30c quite nice. but the place has shut down, July Aug France stops. My wife can't get her hair cut until mid August.
I've been used to working in Oz, and can't believe the whining about the temperature. if it's 40 plus I'll go inside but not 30c .
GREECE I haven't visited, but if it's any worse than France it's going down the toilet..
In the map they excluded the extreme north of Italy, where they speak mainly german (Bozen/Bolzano, Sterzig/Vipiteno ...) :)
Italy looks like a long leg with a high heald boot kicking a funny shaped.................can
"What will happen when the pumping eventually stops?"
The right question is "what will happen given that the pumping is never going to stop"?
That's when the groaning and moaning and grunting and squealing gets loudest. (I do a lot of porn voiceover work. )
on the boot now. Lago di Como. Truly surprised at the lack of tourists. Everything Saldi (on sale 30-50% OK its just before for Aug but still) in the shops. Two of the top restaurants in Italy (top 50 world) thanked the Mrs for RSVP Thurs and said Friday too? Villa D'Este just had a late lunch. Americans mostly, one Japanese couple and one Kuwaiti family, bunch of Brits and Swiss but not much exciting. only one Ferrari Ferrari and one SLS in the parking lot which usually is an Italian exotic car parking lot.
as for RE. lots and lots on Sale. the interesting stuff never shows a price until u call. the good stuff while cheaper is still out of this vulture's reach, even w/ the declining Euro and boy does that help
thinking to come back in the Fall (pun intended)
International Socialism must be destroyed
Rule of thumb, don’t invest in insolvent entities. A litmus test to determine insolvency- If a nation could not borrow, and didn’t have access to a printing press, could they meet their obligations? No? Don’t freaking touch their bonds.
California, Illinois and, of course, Puerto Rico come to mind.
P R I C
?
Puerto Rico's debt since the '80s has been for everything except investment. What is wrong with bond buyers, are they stupid or lied to by the same old boys from the Wall?
Europe has crossed the threshold; it's now a clown-car, a geriatric petting zoo to everyone, even those inside its borders, who's only beneficiary was Germany.
Putin is smiling.
Italy is the new Greece.
How has Ireland avoided the news with such a high level of non-performing loans? The luck of the Irish?
no, it's just that Ireland is less interesting as a target for "bear raids"
at the end, it's still a lot about giving some targets to those who wake up in the morning and ask themselves: "what the heck could I short, today?"
That is a rather naive statement to make Ghordius, which shows you are more then a bit lost in your understanding of finance. You first MAKE yourself a target, and then you are INEVITABLY targetted. It is math my friend, and you got your equation backwards.
you can only be targeted if there are financial markets that allow this kind of things. and they need a certain size and accessibility, while also allowing some deniability
try to "short Somalia", for example. not long ago, there were lots of articles about "how to short Japan" because doing it directly was not seen as an option. I forgot the name of that hedge-fiund manager that was a darling of ZH, then, who adviced on how to short Japan indirectly. or try to short China
The causality here is, that First an investor analyzes an existing situation such as gross overvaluation or undervaluation of a currency, or basket of assets, Then he invests/divests/shorts/hedges accordingly, which he hopes he does ahead of others.
Notice the "existing" ahead of "situation"
That is entirely beside the point here Ghordius. You really are very proficient in ignoring very simple arguments and settting up straw dogs in their stead.
Of course we are talking about relatively efficient and relatively free capital markets, which do include Italy and Ireland, but not Somalia. If you want Somalian markets, well you would need the entire market system as we know it to explode first... oh wait.
Ireland was fixed years ago. Move along
There is an Aparteid situation in Ireland with regard to mortgages which isn't reported much. Most of the nonperforming loans are in the form or Tracker loans which are extremely loss making for the scumbag banks but they balance it out by charging non Tracker loans (mortgages) a full 2% above the European average i.e. 5% v 3% in Germany etc. This is how this BS is covered up but it doesn't escape the fact that a large majority of floating rate customers are being royally screwed.
Same thing happens and did happen in USA back in 2007/2008. ARM / adjustable rate mortgages are often the first to go bad.
They pay their money and take their chances. Some do well, some less well. They make their best guess according to their own circumstances and expectations and commit accordingly.
Borrowing makes you a slave, whether you are a country or an individual makes no difference.
Poor people in poor countries build their shelters hand to mouth. In developed countries high quality buildings are built all at once. Thanks to finance, and rule of law, and property rights.
Agreed. And when bank interest rates rise from their current low rates, the pain on variable loan holders will only get worse here in Ireland.
Regarding Italy, ECB's most recent bank stress tests said that with the exception of a couple of Italian banks, every other Italian bank was fine and dandy.
Just give up your sovereignty now Italy
They already have. Get with the program.
Italy has not been a sovereign entity much longer than most of the cobbled together countries of the middle east. Big sections of Italy don't want to live under an Italian sovereign. Its a microcosm of overcentralisation within the encompassing dead weight of overcentralization that is "Europe"
"If one thinks things properly through, Greece is really a side-show. The euro zone remains full of accidents waiting to happen and some of them have the potential to become truly gigantic accidents."
That's why we need distractions like Greece. Makes people think the problem is always somewhere else, somewhere far away where normal people never go.
Europe = Titanic
Greece = Band, on the Titanic
...and Greece is of 'manageable' size....lets think about that rather than China....which may bring down Brazil, Australia, and a few other countries dependent on exports to that country.
The Euro and the E.U. are doomed, but so is the U.S. Ponziconomy.
Time for a debt jubilee; hang the bankers and complicit politicians!
Jubilee suggests something happy. When the debt bubble bursts it will be sudden and shocking in that as the debts implode so will asset prices, and the resulting loss of wealth among job creators will make them very very cautious about risk taking. We may see gas at $.25 per gallon again and annual wages at $5,000 - $6,000.
They're all feeding at the trough...
Poison the ..........................trough
Tyler, you missed a very good post in the mean time: http://www.acting-man.com/?p=38507
is that because it's not aligned with your viewpoint?
hmmmm ... I wonder why the bad loans in Italy so much higher in southern Italy ?????
/SARC
from the first map you can have an example that there are two Italy, north and south, northern Italy is more or less like Germany while southern Italy is like Greece, but unfortunately nobody knows it abroad and northern Italians are considered the same as southern Italians
True, Northern Italians look more like Europeans too whereas southern ones look more like,,,well, Italians. Those Northern fuckers look down their noses at their southern brethren also.
Draw a line.
NEURO
________________________
SEURO
and the take away: the warmer the climate, the less time to make a timely payment. (gellato, bikinis, hammocks, etc..)
If anyone thought Greece has alot of welfare babies, "civil servants", and so on, they need to check out Italy.
Why Italy?
US is even worse.
Good. We can't build a better world without the clusterfuck collapsing first.
whats Italys NPL issue got to do with France? Not a single data point on that...!
Italy, France and Spain have the "too big to fail" status bankers covet.
Unconditional bailouts with bonuses all round.
Greece is a red herring to divert attention from China's coming economic collapse.
I HAVE A QUESTION.
If the EURO DIES Who pays the damage and what China, Japan, Russia and others THAT HOLD EURO BONDS lose?
You.
Bottom line mass immigration is financed by loan fraud.
Pretty hostile climate in Italy for industry; http://www.wsj.com/articles/SB10001424052702304898704577478111174204768
free article access via:
https://www.google.com/?gws_rd=ssl#q=employment+italian+style+wsj
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