Italian Bad Loans Surge To Highest Since 2000, Foreign Deposits Plunge

Tyler Durden's picture

Maybe we can call today bad loan day: earlier today the Bank of Spain announced that Spanish bank loans, already rising in a rather disturbing diagonal fashion, have surpassed 8% of total for the first time since 1994. Now it is Italy's turn, where we find courtesy of ABI, that gross non-performing loans, aka bad-debt, has just reached €107.6 billion, or 6.3% of total, and the highest since 2000, not to mention a doubling of the 3.0% in June 2008. It gets worse: as Reuters reports, while domestic deposits in February rose by a heartening 1.6% in February, it is foreign deposits that confirm that not all is well with the country's financial system, declining a whopping 16% in February y/y, and the 8th consecutive monthly decline, a chart which resembles that of Greek deposit outflows. The reason why Italy, like all the other peripherals, is now a ward of the ECB? Simple: "Net funding from abroad stood at 182 billion euros, down 32.5 percent year-on-year." And if there is no external money, the Central Bank will need to save.

More from Reuters:

With the Italian economy mired in recession, gross non-performing loans rose 16.5 percent to 107.6 billion euros in February.


Credit quality deterioration was marked compared to the levels seen before the start of the financial crisis, ABI said, with bad loans as a percentage of loans to the private sector more than doubling to 6.3 percent in February from 3 percent in June 2008.


The growth in the overall volume of loans to the private sector stood at 0.9 percent in March, little changed from the month before, a sign credit expansion remains sluggish despite the ECB cash flood.

This may not even be the worst news: reminding everyone that in a deleveraging environment incremental cash can only come from retained earnings (yes, we jest), or asset sales, the IMF told the market that European banks "could be forced to sell as much as $3.8 trillion in assets through 2013 and curb lending if governments fall short of their pledges to stem the sovereign debt crisis or face a shock their firewall can’t contain, the International Monetary Fund said." Of course, for every seller there should be a buyer. And there will be. When the prices plunge.

From Bloomberg:

In a study of 58 banks including BNP Paribas SA (BNP) and Deutsche Bank AG (DBK), the IMF forecast that under such circumstances, gross domestic product in the 17-country euro region would be 1.4 percent lower than now expected after two years. Even under its baseline scenario, the IMF sees banks’ combined balance sheets possibly shrinking by as much as $2.6 trillion.


“So far, deleveraging has occurred predominantly through buttressing capital positions and reducing non-core activities, leaving the impact on the rest of the world manageable,” the IMF said in its Global Financial Stability Report released today. “It is essential to continue to avoid a synchronized, large-scale, and aggressive trimming of balance sheets that could do serious damage to asset prices, credit supply, and economic activity in Europe and beyond.”


Banks in the sample studied by the IMF reduced assets by almost $580 billion in the last quarter of 2011, it said.


Governments should complete and extend the measures already agreed upon to reassure investors if they want to limit the impact of banks’ deleveraging, the IMF recommended. That includes continuing to reduce budget deficits while supporting demand as much as possible, restructuring banks and having the region’s rescue funds inject capital directly into them, it said.


“For an effective monetary union, deeper integration is required,” the IMF said. “Fiscal arrangements will need to be redesigned to accomplish ex ante fiscal risk-sharing,” without which “countries will continue to face very different financing conditions and remain prone to having liquidity crises turn into solvency concerns.”

But, but, Mario Monti told us everything was fixed? Surely the ex-Goldmanite was not joking...

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
writingsonthewall's picture

"already rising in a rather disturbing diagonal fashion"

Just say it how it is...stop this diplomatic talk.

EvlTheCat's picture

waka! waka! waka!  Doesn't quite roll off the keyboard like LOL!

jus_lite_reading's picture

A former colleague of mine now living in Italy said he moved all his liquid assets to Germany... according to what he sees occuring, a bank run like the ones in Greece will occur shortly in Italy. His most trusted "currency" is gold and silver...

Canucklehead's picture

That seems like a smart move, up to a point.

If you were Germany and have just been raped by the Southern European Union political machine, how would you implement capital controls?  If a nation's central bank wants to burn you via TARGET2, do you freeze their citizen's assets in your country?

Time is money.  Money is power.  Power is Politics.

Your friend should be prepared not to have access to his funds for a period of time.

PontifexMaximus's picture

But cash payments are only accepted up to EUR 1'000.00.

Buck Johnson's picture

The game is coming to an end and they are seeing it in HD.

jmcadg's picture

No doubt Bullish for that dog known as the Euro!

Quintus's picture

They should have announced all this stuff yesterday when nobody had a care in the world, markets were soaring and bad news was totally irrelevant.

writingsonthewall's picture

But, but, Mario Monti told us everything was fixed? Surely the ex-Goldmanite was not joking...

If I had a Euro for everytime someone told me something economic was 'fixed' in the last 4 years - I could bail out Italy and Spain myself...


....but not Greece - that's absurd.

Cognitive Dissonance's picture

Thank God there's all that liquidity sloshing around in the ship's bilge.

Bilge water. It's what's for dinner.

Dick Darlington's picture

Waiting for Dick Bove's report titeled "italian and spanish banks are fine".

Snakeeyes's picture

Lions and tigers and bears, oh my!

PaperBear's picture

Italy was feeling left out with all the goings wiht Spain and Greece. Welcome to the party at the end of the universe, Italy.

q99x2's picture

It is getting harder to find people dumb money to throw under the bus.

Dumb money is getting it harder to find people to throw under the bus.

The people under the bus are getting it harder to find money to throw.

web bot's picture

Web Bot technlogy (of which I am not associated - and yes they are bit nuts lately...), has been showing some startling linguistical data regarding radiation poisoning.

So far, the articles above look wacky... but ALTA shows massive radiation poisoning hitting the northern hemisphere.

If things were as bad as this article is saying, it would be impossible to keep something like this under wraps... but let's keep watching.


youngman's picture

I wonder how much gold and silver the banks own...if any.....???   they could sell that....but if all they own are mortgage backed securities.....probably not going to get to much for that....or sovereign debt...not much for that either....but that is so next year....we only deal day to day now....

web bot's picture

The most important question my friend is... how much gold and silver do you own?

No need to repost.   :)

Sauk Leader's picture

The Fed may be interested in a few of those MBS.

Dick Darlington's picture

But it's good the Greek banks just got 25 billion of EFSF bonds in order to pretend they are solvent. Just to remind You abt the circular ponzi nature of EFSF, here's the info abt who's guaranteeing and how much.


Italy is supposed to guarantee 139 billion and Spain 92,5 billion. Now let's say together: ROF fookin LOL!



Trimmed Hedge's picture

I'ah paya you back.. I swear, I'ah paya you back....

Dick Darlington's picture

And a couple of weeks ago the said Pinoccio screamed that the crisis is over. Building credibility...

walküre's picture

They even said this about Greece. Possibly if they hit absolut rock bottom. Germany was growing leaps and bounds right after 1945.

csmith's picture

Of course, for every seller there should be a buyer. And there will be. When the prices plunge.


Nope. Prices will not be permitted to decline. That's what QE is all about. Markets lock up, volume evaporates, and extend and pretend is then fully in place. Then the slow-motion deflationary grind begins. We've been at it for almost 4 years here in the U.S., and Japan is going on two decades.

Peter K's picture

Further EU integration will NOT remedy the competitiveness gap of the respective countries. All it will do is subsidize the weaker of the lot. But at the end of the day, subsidization doesn't work. Just ask the ancient Romans :)

Peter Pan's picture

The level of denial is matched only by the level of complacency both of which are held in place by the fake liquidity facade generated by the ECB. The european bureaucrats will however extend and pretend as they know that there will be no jobs back home if the Euro collapses.

Confundido's picture

On another subject, what are the chances that AAPL higher this morning had been the act of Bruno Iskil to keep unwinding his cds index position? How the fuck else can stocks not plunge today?

Dick Darlington's picture

Stocks raise because, well, stocks raise. Duh! ;-)

buzzsaw99's picture

the bernank will buy them

smb12321's picture

The increasingly authoritarian nature of European regimes is becoming clearer.  After all, capitalism requires capital in order to work and in places like Spain, Italy and Greece where capital is rapidly disappearing (despite the infusion of billions/trillions) the only recourse is to descend into fascist/socialist "solutions" with no end in sight.  Who would have thought that Europe - the birthplace of liberalism and podium for lecturing those who refuse to support their failed ideas - would turn out like this?

navy62802's picture

Jim Cramer - NO! NO! NO! Italy is FINE!

j0nx's picture

Mama Mia! Ima Luigi!!

Tom Green Swedish's picture

Its cool to not pay your loans in Italy Spain Greece and the rest of Eastern Europe.  They just want money no strings attached.  I have experienced this first hand.  They ask you for money and never pay it back.  They are so pathetic and think they are entitled to BMW's and everything else hardworking people have.  And when they don't get it they throw temper tantrums like little babies and wreck things.  Somebody take the it all away from these fucking babies.  They are fucking up the entire world economy. We do not need these worthless shits.   They have absolutely nothing to contribute yet they want the lifestyle of those who do.


If I was the ECB or IMF or whoever is in the market to buy their bonds I would not buy any of them and cut my losses immediately.  Doesn't matter how high the interest is. They will not and cannot pay the money back.  It's that simple.  If they were going to pay it back we wouldn't have this problem now would we? This is their culture. They are theives. What should happen is they should default all their assets over to the banks now and end it. Are the banks, etc really that stupid?