Below is my interview with Corriere as well as the original text in English.
Wolff: serve un meccanismo che non protegga solo i creditori
BRUXELLES «Il lavoro di ripulitura non è finito». A dirlo è Guntram Wolff, direttore del centro studi europeo Bruegel e attento osservatore degli scenari economici europei.
Qual è lo stato di salute del sistema bancario italiano?
«Il rapporto tra valori di mercato e contabili dei patrimoni di molte banche è ancora basso, ci sono ancora troppi crediti inesigibili, e le prospettive di crescita per l’Italia sono per ora inferiori rispetto, ad esempio, agli Stati Uniti – dunque è improbabile che le banche aumentino presto la loro redditività. Le autorità italiane sono state lente nell’affrontare il problema, e le banche hanno a volte preferito distribuire dividendi, piuttosto che aumentare il proprio capitale. In passato, gli stress test non sono riusciti a ripristinare la fiducia nel sistema. Stiamo a vedere: ma i sacrifici per i creditori non possono ancora dirsi del tutto scongiurati».
Il problema, però, non è solo italiano…
«Certo: la crisi è europea e dura da 7-8 anni. Sarebbe stato preferibile un intervento deciso nel 2009; si scelse di lasciar fare ai singoli Paesi, e in alcuni si è andati più lenti che in altri. In Germania è stato usato molto denaro pubblico – troppo, probabilmente – ma non sono stati risolti tutti i problemi. Il rapporto tra valore di mercato e quello contabile di Deutsche Bank, ad esempio, dipinge una realtà fragile, pur se non come Mps. Al sistema servono ristrutturazioni e fusioni internazionali».
L’Ue non ha ceduto sul principio della condivisione degli oneri, rendendo politicamente tossico ogni intervento di Stato. Ha fatto bene?
«Quelle regole hanno rappresentato una svolta positiva ed essenziale: si è passati dal proteggere i creditori al proteggere contribuenti, lavoratori e consumatori. È chiaro che, se ci sono stati episodi di vendita scorretta di titoli di credito – come potrebbe essere accaduto nel caso italiano – vanno accertate le responsabilità di chi non li ha prevenuti, e compensati i risparmiatori frodati. Ma non credo che il principio del burden sharing possa scatenare crisi sistemiche. E poi, la promessa di mettere al riparo i soldi dei contribuenti fu sposata dal governo italiano».
Quali riforme sono ora più urgenti?
«La lentezza della giustizia civile e quella delle procedure di pignoramento riducono il valore dei non performing loans . Va creato un meccanismo che non protegga solo, in modo miope, i creditori: è fondamentale, non soltanto in Italia. Occorrerà tempo, ma è importante che il governo abbia già iniziato a fare qualcosa in questo senso».
Non c’è il rischio che, a volte, dei meccanismi pensati per aumentare la trasparenza destabilizzino il sistema che vogliono migliorare?
«Aumentare la trasparenza è sempre positivo. E i guai delle banche italiane non sono certo recenti: derivano da problemi strutturali – inefficienza e costi troppo alti – e dalla scarsa volontà di affrontare per tempo il problema dei crediti inesigibili, cosa che invece Irlanda e Spagna hanno fatto. Per questo il sistema bancario è ancora più debole rispetto ad altri Paesi. La supervisione europea è un fattore positivo: spinge verso la soluzione di problemi che rallentano non solo le banche, ma tutta l’economia italiana».
© RIPRODUZIONE RISERVATA
Le banche hanno preferito distribuire dividendi invece di rafforzare
il proprio capitale
Below the original text in English
- Professor Wolff, according to leaks on Il Sole 24 Ore, confirmed by sources at Corriere della Sera, four out of five Italian banks will be given high marks in the Eba’s stress tests, while Mps needs to address its problems – and a plan is currently under way. How do you judge the solidity of the Italian banking system? Should italian investors be worried?
The market to book values of many banks in Italy is low. Moreover, we know that relatively high amounts of non-performing loans are on the books of banks and that Europe has been slow in resolving some of the private debt overhang problems. Finally, Italian growth perspectives are still lower than for example in the US – this means that higher profitability is unlikely in the near future. Italian authorities have been slow in addressing the issue and banks have for far too long continued to distribute dividends instead of strengthen their capital base. The EBA’s stress tests are solid but they have previously failed to restore trust in Europe’s banks. We shall see what the new results deliver instead of basing our judgement on speculation. Overall, I would argue that we still have not finished the job of cleaning up the banking system. As a consequence, more losses imposed on bank creditors are possible.
2. On July 25, Peter Jenkins wrote in the Financial Times that Deutsche Bank and Commerzbank look as vulnerable as some of the Italian lenders. Does it mean the problems of the banking system are more of an European problem than just an Italian one? Do you think that – overall – the European banking system is a solid one?
The EU’s banking system is indeed undergoing a crisis that by now lasts some seven or eight years. It would have been preferable to apply a front-loaded, one-off treatment to the system back in 2009. But the decision was to treat banking problems on a country by country level. In some countries, the problems were addressed quicker than in others. Italy is clearly among the countries addressing the problems relatively late. In Germany, a lot of public money was used to address the issue, arguably too much in some instances, but not all problems were addressed. Market to book values in Deutsche Bank paint a fragile picture, though the level is much better than in MPS. More generally, I would agree that Europe’s banking system is still in need of more restructuring and more cross-border mergers. Its profitability is low and its activities are too focused on individual countries preventing effective risk sharing across borders.
3. The European commission decided not to consider the current conditions of the system as “exceptional”, and refused to suspend the burden sharing rules – thus basically stopping the Italian government to intervene directly in Mps. Do you think this was the right thing to do?
The new burden sharing rules represent a break-through: EU countries have decided to shift away from a system that protects creditors and savers towards a system that protects taxpayers and thereby workers and consumers. I think this is an essential move, which is good for our societies. It is especially relevant in countries that have already high debt levels, like Italy. Even before the decision to implement BRRD, it should have been clear to any buyer of junior bank debt that this debt is not risk free. If there have been episodes of mis-selling, as it seems to have happened in the Italian case, those who did not prevent it should be held accountable and those who were victims of fraud should be compensated once fraud is ascertained. But I think it is a great achievement that Italian taxpayers get this protection. It is important to recall that the strategies of public rescues of banks that prevailed during the crisis fed a sovereign-banks vicious circle that resulted in significant instability and it was a reason for a lot of political anger. I cannot see that burden sharing would trigger a major systemic financial crisis that would justify breaking this promise to tax-payers, which incidentally was also negotiated and supported by the Italian government.
4. The market solution Mps is trying to find will shy away from any State intervention. Is this the definitive solution for Mps? Does it show a way out of their problems to other troubled banks in Italy?
The BRRD rules offer some flexibility in the rules for pre-cautionary recapitalisation to solvent banks “in order to remedy a serious disturbance in the economy of a member state and preserve financial stability”. This may have to be used. There is certainly also a need to consider the case of junior creditors in social hardship. In the specific case of MPS, more than half of the outstanding junior debt was sold to retail clients who may have had little awareness of the risk they were underwriting or may have been the victims of misselling practices. This is not a reason for protecting all junior bondholders ex ante – because responsibility should be ascertained and not assumed – but it is a compelling reason to envision a compensation scheme for the wronged, consistently with what was done last year.
Last week, president Mario Draghi, of ECB, talked about the possibility for the State to help troubled banks – in “exceptional conditions”. But he devoted a significant part of his speech to an urgent appeal to the Italian government to act more on the side of the civil justice – to make it possible for creditors to swiftly take back their credits. What kind of reforms should Italian government put in place to help the system grow stronger?
One of the problems in Italy is a relatively slow functioning justice system. This can, de facto, reduce the value of non-performing loans as it is difficult to enforce the seizing of collateral, let alone go through insolvency proceedings that are fast and effective aiming and maximizing the recovery value. This is a long-term challenge but an important challenge in many countries: create a justice and insolvency framework that is not just blindly protecting creditors but maximizing the recovery value and the speed in case of insolvency or pre-insolvency. It is positive that the government started acting on this front, although it will certainly take time to complete this challenge.
- The ECB banking supervision asked Mps to accelerate its program and sell, at double the speed the Ecb banking supervision itself previously declared, 10 billions’ worth of Npls. This very request forced the whole Italian banking system to rush to find a solution. Draghi said that Npls related problems are not ones one could tackle quickly. Do you think sometimes mechanisms thought for enhancing transparency and helping the banking system risk to de-stabilyze the system they want to fix?
Higher transparency is basically always a good thing, and banks’ balance sheets are no exception to that. It is misplaced to attribute the current Italian situation to the ECB’s request. Italian banks’ NPL ratio today is among the highest in Europe and their profitability is among the lowest. This is the outcome of long-lived structural problems on one hand (such as relatively high costs and inefficiencies in the system) and of the scarce willingness to address the NPL issue earlier on, which other countries like Spain and Ireland did. As a result, the system is still weaker than in other countries and more prone to stress. Independent ECB supervision should be seen as a positive factor in this context, pushing for the solution of long-lived problems that are dragging also on the Italian economic performance.