Profitability And Balance Sheet Repair Of Italian Banks

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Profitability and Balance Sheet Repair of Italian Banks

Andreas Jobst,Anke Weber
Profitability and Balance Sheet Repair of Italian Banks Book PDF

Author : Andreas Jobst,Anke Weber
Publisher : International Monetary Fund
Page : 34 pages
File Size : 44,7 Mb
Release : 2016-08-19
Category : Business & Economics
ISBN : 9781475527513

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Profitability and Balance Sheet Repair of Italian Banks by Andreas Jobst,Anke Weber Pdf

The profitability of Italian banks depends, among other factors, on the strength of the ongoing economic recovery, the stance of monetary policy, and the beneficial effects of current and past reforms, notably to address structural obstacles to resolving nonperforming loans (NPLs) and to foster banking sector consolidation. Improved profitability would enable banks to raise capital buffers and accelerate the cleanup of their balance sheets. This paper investigates quantitatively the current and prospective earnings capacity of Italian banks. A bottom-up analysis of the 15 largest Italian banks suggests that the system is on the whole profitable, but that there is significant heterogeneity across banks. Many banks should become more profitable as the economy recovers, but their capacity to lend depends on the size of their capital buffers. However, a number of smaller banks face profitability pressures, even under favorable assumptions. There is thus a need to push ahead decisively on cleaning up balance sheets, including through cost cutting and efficiency gains.

Cleaning-up Bank Balance Sheets

José Garrido,Emanuel Kopp,Anke Weber
Cleaning up Bank Balance Sheets Book PDF

Author : José Garrido,Emanuel Kopp,Anke Weber
Publisher : International Monetary Fund
Page : 33 pages
File Size : 45,6 Mb
Release : 2016-07-11
Category : Business & Economics
ISBN : 9781498357036

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Cleaning-up Bank Balance Sheets by José Garrido,Emanuel Kopp,Anke Weber Pdf

To stabilize and bring down nonperforming loans (NPLs) in the Italian banking system, the Italian authorities have been implementing a number of reforms, aimed among others at speeding up insolvency and enforcement proceedings, strengthening bank corporate governance, cleaning up balance sheets, and facilitating bank consolidation. This paper examines the Italian banking system’s NPL problem, which ties up capital, weighing on bank profitability and authorities’ economic reforms. It argues for a comprehensive approach, encompassing economic, supervisory, and legal measures. The authorities’ reforms are important steps toward this end. The paper describes measures that could further support their actions.

Bank Consolidation, Efficiency, and Profitability in Italy

Anke Weber
Bank Consolidation Efficiency and Profitability in Italy Book PDF

Author : Anke Weber
Publisher : International Monetary Fund
Page : 25 pages
File Size : 46,8 Mb
Release : 2017-07-27
Category : Business & Economics
ISBN : 9781484309261

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Bank Consolidation, Efficiency, and Profitability in Italy by Anke Weber Pdf

This paper examines the case for efficiency-driven banking sector consolidation in Italy, evaluates its potential effects on profitability, and discusses policy options to facilitate a consolidation process that is as effective as possible. A bottom-up analysis of 386 Italian banks suggests that while profitability is expected to improve as the economy gradually recovers, operational efficiency gains are nonetheless needed to restore large parts of the banking system to healthy profitability. Banking system consolidation can play a role in facilitating such efficiency gains, but its effectiveness is likely to be most as part of a comprehensive strategy that includes complementary reforms to clean up bank balance sheets. Cross-country experience indicates that efficiency gains are more likely to follow consolidations where careful viability analyses are conducted of the synergies and operational improvements that can be achieved.

Italy

International Monetary Fund. European Dept.
Italy Book PDF

Author : International Monetary Fund. European Dept.
Publisher : International Monetary Fund
Page : 43 pages
File Size : 46,8 Mb
Release : 2016-07-12
Category : Business & Economics
ISBN : 9781475580990

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Italy by International Monetary Fund. European Dept. Pdf

This Selected Issues paper analyzes the conditions under which Italian banks can earn sufficient profits to grow out of their asset quality problems, rebuild capital buffers, and finance the real economy. A bottom-up analysis of the 15 largest Italian banks suggests that restoring sustainable profitability depends heavily on the growth outlook. Many banks are expected to become more profitable as the economy recovers, but their capacity to lend depends on the size of their capital buffers. However, a number of smaller banks face substantial profitability pressures, highlighting the need to reduce the large stock of nonperforming loans and for further cost cutting and efficiency gains.

Bank Funding Strategies

Fabrizio Crespi,Danilo V. Mascia
Bank Funding Strategies Book PDF

Author : Fabrizio Crespi,Danilo V. Mascia
Publisher : Springer
Page : 147 pages
File Size : 46,8 Mb
Release : 2017-11-30
Category : Business & Economics
ISBN : 9783319694139

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Bank Funding Strategies by Fabrizio Crespi,Danilo V. Mascia Pdf

This book illustrates the importance of bonds as a funding tool available to banks. After providing the reader with an overview of the funding strategies adopted during the last ten years by European banks, the book offers a deep focus on the Italian banking industry. Notably, the authors illustrate how bonds have been a primary funding choice for Italian banks, as well as a preponderant asset in Italian households’ portfolios. Furthermore, they highlight the consequences of the adoption of the Bank Recovery and Resolution Directive (BRRD) on the yields offered by bonds of Italian banks. Finally, they conclude the volume with the illustration of very recent case studies about the application of the BRRD to some problematic banks in Italy and the related side effects generated to bank bondholders. All the analyses presented in the book are supported by the use of quantitative data.

Can Italy Grow Out of Its NPL Overhang? A Panel Threshold Analysis

Mr.Kamiar Mohaddes,Mr.Mehdi Raissi,Anke Weber
Can Italy Grow Out of Its NPL Overhang A Panel Threshold Analysis Book PDF

Author : Mr.Kamiar Mohaddes,Mr.Mehdi Raissi,Anke Weber
Publisher : International Monetary Fund
Page : 17 pages
File Size : 52,7 Mb
Release : 2017-03-24
Category : Business & Economics
ISBN : 9781475588873

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Can Italy Grow Out of Its NPL Overhang? A Panel Threshold Analysis by Mr.Kamiar Mohaddes,Mr.Mehdi Raissi,Anke Weber Pdf

This paper examines whether a tipping point exists for real GDP growth in Italy above which the ratio of non-performing loans (NPLs) to total loans falls significantly. Estimating a heterogeneous dynamic panel-threshold model with data on 17 Italian regions over the period 1997–2014, we provide evidence for the presence of growth-threshold effects on the NPL ratio in Italy. More specifically, we find that real GDP growth above 1.2 percent, if sustained for a number of years, is associated with a significant decline in the NPLs ratio. Achieving such growth rates requires decisively tackling long-standing structural rigidities and improving the quality of fiscal policy. Given the modest potential growth outlook, however, under which banks are likely to struggle to grow out of their NPL overhang, further policy measures are needed to put the NPL ratio on a firm downward path over the medium term.

Negative Interest Rate Policy (NIRP)

Andreas Jobst,Huidan Lin
Negative Interest Rate Policy NIRP Book PDF

Author : Andreas Jobst,Huidan Lin
Publisher : International Monetary Fund
Page : 48 pages
File Size : 42,9 Mb
Release : 2016-08-20
Category : Business & Economics
ISBN : 9781475528596

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Negative Interest Rate Policy (NIRP) by Andreas Jobst,Huidan Lin Pdf

More than two years ago the European Central Bank (ECB) adopted a negative interest rate policy (NIRP) to achieve its price stability objective. Negative interest rates have so far supported easier financial conditions and contributed to a modest expansion in credit, demonstrating that the zero lower bound is less binding than previously thought. However, interest rate cuts also weigh on bank profitability. Substantial rate cuts may at some point outweigh the benefits from higher asset values and stronger aggregate demand. Further monetary accommodation may need to rely more on credit easing and an expansion of the ECB’s balance sheet rather than substantial additional reductions in the policy rate.

Banking in Europe

Mariarosa Borroni,Simone Rossi
Banking in Europe Book PDF

Author : Mariarosa Borroni,Simone Rossi
Publisher : Springer
Page : 118 pages
File Size : 53,7 Mb
Release : 2019-04-09
Category : Business & Economics
ISBN : 9783030150136

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Banking in Europe by Mariarosa Borroni,Simone Rossi Pdf

This Palgrave Pivot provides a comprehensive overview of the dynamics that are affecting the profitability of European banks since the recent crisis period. More specifically, it sheds light on the most crucial changes in profit generation and on the consequential changes in banking strategies due to fiercer competition, reduced margin and changing regulation. The work is divided in four main parts. The first section introduces the changes in bank management policies, considering the periods before and since the crisis. In the second section, the authors review the literature on bank profitability and outline the main determinants of profit generation, and in the third section they provide a cross-country analysis of profitability for a wide sample of European banks during the great financial crisis. In the last section, the authors discuss the results of the quantitative analysis under the new regulatory and competitive framework that is progressively affecting the banking sector (fintech, Basel regulations, etc.). This book will be of interest to academics, researchers and students of European banking.

Euro Area Policies

International Monetary Fund. Monetary and Capital Markets Department
Euro Area Policies Book PDF

Author : International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
Page : 94 pages
File Size : 49,7 Mb
Release : 2018-07-19
Category : Business & Economics
ISBN : 9781484369586

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Euro Area Policies by International Monetary Fund. Monetary and Capital Markets Department Pdf

This technical note consists of five chapters focusing on various aspects of systemic risk analysis across the euro area financial system. The chapters cover bank profitability, balance sheet- and market-based interconnected analysis, contingent claims analysis, and a brief discussion of data gaps in the nonbank, non-insurance (NBNI) financial sector. The ongoing economic recovery will support euro area bank profitability in general, but it is unlikely to resolve the structural challenges faced by the least profitable banks despite some recent improvements. This is important because persistently weak bank profitability is a systemic financial stability concern. Empirical analysis of 109 major euro area banks over 2007–2016 reveals that real GDP growth and the NPL ratio are the most reliable determinants of profitability, after accounting for other factors. Although higher growth would raise profits, a large swath of banks with the weakest profitability would most likely continue to struggle even with a robust recovery. Therefore, banks should take advantage of the current upswing by resolutely addressing their NPL stocks—such a strategy holds the most promise for weak banks’ profitability prospects.

The Global Bank Stress Test

Xiaodan Ding,Mr. Marco Gross,Mr. Ivo Krznar,Mr. Dimitrios Laliotis,Mr. Fabian Lipinsky,Pavel Lukyantsau,Mr. Thierry Tressel
The Global Bank Stress Test Book PDF

Author : Xiaodan Ding,Mr. Marco Gross,Mr. Ivo Krznar,Mr. Dimitrios Laliotis,Mr. Fabian Lipinsky,Pavel Lukyantsau,Mr. Thierry Tressel
Publisher : International Monetary Fund
Page : 40 pages
File Size : 49,9 Mb
Release : 2022-04-06
Category : Business & Economics
ISBN : 9798400204524

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The Global Bank Stress Test by Xiaodan Ding,Mr. Marco Gross,Mr. Ivo Krznar,Mr. Dimitrios Laliotis,Mr. Fabian Lipinsky,Pavel Lukyantsau,Mr. Thierry Tressel Pdf

This paper presents the framework underlying the Global Bank Stress Test (GST) and applies it to recent data and global scenarios to illustrate the usefulness of the framework in assessing the potential impact of global shocks on banks around the world. The results of this latest update of the GST continue to point to relatively lower levels of resilience of banks in emerging market economies (EMs) than in advanced economies (AEs).

Euro Area Policies

International Monetary Fund. European Dept.
Euro Area Policies Book PDF

Author : International Monetary Fund. European Dept.
Publisher : International Monetary Fund
Page : 70 pages
File Size : 48,7 Mb
Release : 2016-07-08
Category : Business & Economics
ISBN : 9781498353878

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Euro Area Policies by International Monetary Fund. European Dept. Pdf

This 2016 Article IV Consultation highlights that the recovery in euro area has strengthened recently. Lower oil prices, a broadly neutral fiscal stance, and accommodative monetary policy are supporting domestic demand. However, inflation and inflation expectations remain very low, below the European Central Bank’s medium-term price stability objective. Euro area GDP growth is expected to decelerate from 1.6 percent in 2016 to 1.4 percent in 2017, mainly owing to the negative impact of the U.K. referendum outcome. Growth five years ahead is expected to be about 1.5 percent, with headline inflation reaching only 1.7 percent.

Cleaning-Up Bank Balance Sheets

José Garrido
Cleaning Up Bank Balance Sheets Book PDF

Author : José Garrido
Publisher : Unknown
Page : 34 pages
File Size : 55,9 Mb
Release : 2016
Category : Electronic
ISBN : OCLC:1305850597

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Cleaning-Up Bank Balance Sheets by José Garrido Pdf

To stabilize and bring down nonperforming loans (NPLs) in the Italian banking system, the Italian authorities have been implementing a number of reforms, aimed among others at speeding up insolvency and enforcement proceedings, strengthening bank corporate governance, cleaning up balance sheets, and facilitating bank consolidation. This paper examines the Italian banking system's NPL problem, which ties up capital, weighing on bank profitability and authorities' economic reforms. It argues for a comprehensive approach, encompassing economic, supervisory, and legal measures. The authorities' reforms are important steps toward this end. The paper describes measures that could further support their actions.

COVID-19: How Will European Banks Fare?

Mr.Shekhar Aiyar,Mai Chi Dao,Mr.Andreas A. Jobst,Ms.Aiko Mineshima,Ms.Srobona Mitra,Mahmood Pradhan
COVID 19 How Will European Banks Fare Book PDF

Author : Mr.Shekhar Aiyar,Mai Chi Dao,Mr.Andreas A. Jobst,Ms.Aiko Mineshima,Ms.Srobona Mitra,Mahmood Pradhan
Publisher : International Monetary Fund
Page : 114 pages
File Size : 54,7 Mb
Release : 2021-03-26
Category : Business & Economics
ISBN : 9781513572772

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COVID-19: How Will European Banks Fare? by Mr.Shekhar Aiyar,Mai Chi Dao,Mr.Andreas A. Jobst,Ms.Aiko Mineshima,Ms.Srobona Mitra,Mahmood Pradhan Pdf

This paper evaluates the impact of the crisis on European banks’ capital under a range of macroeconomic scenarios, using granular data on the size and riskiness of sectoral exposures. The analysis incorporates the important role of pandemic-related policy support, including not only regulatory relief for banks, but also policies to support businesses and households, which act to shield the financial sector from the real economic shock.

Global Financial Stability Report, October 2016

International Monetary Fund. Monetary and Capital Markets Department
Global Financial Stability Report October 2016 Book PDF

Author : International Monetary Fund. Monetary and Capital Markets Department
Publisher : International Monetary Fund
Page : 132 pages
File Size : 42,9 Mb
Release : 2016-10-05
Category : Business & Economics
ISBN : 9781513559582

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Global Financial Stability Report, October 2016 by International Monetary Fund. Monetary and Capital Markets Department Pdf

The current report finds that short-term risks to global financial stability have abated since April 2016, but that medium-term risks continue to build. Financial institutions in advanced economies face a number of cyclical and structural challenges and need to adapt to low growth and low interest rates, as well as to an evolving market and regulatory environment. Weak profitability could erode banks’ buffers over time and undermine their ability to support growth. A cyclical recovery will not resolve the problem of low profitability. More deep-rooted reforms and systemic management are needed, especially for European banks. The solvency of many life insurance companies and pension funds is threatened by a prolonged period of low interest rates. Corporate leverage in emerging market economies remains elevated in some countries, but the current favorable external environment presents an opportunity for overly indebted firms to restructure their balance sheets. The political climate is unsettled in many countries. A lack of income growth and a rise in inequality have opened the door for populist, inward-looking policies. These factors make it even harder to tackle legacy problems and further expose economies and markets to shocks. A potent and more balanced policy mix is needed to deliver a stronger path for growth and financial stability, and avoid slipping into a state of financial and economic stagnation. The report also examines how the rise of nonbank financing has altered the impact of monetary policy and finds that fears of a decline in the effectiveness of monetary policy are unfounded. It appears that the transmission of monetary policy is, if anything, stronger in economies with larger nonbank financial sectors. Finally, the report examines the link between corporate governance, investor protection, and financial stability in emerging market economies. It finds that the improvements over the past two decades have helped bolster the resilience of their financial systems. These benefits strengthen the case for further reform.

Fiscal Monitor, October 2016

Ms.Marialuz Moreno Badia
Fiscal Monitor October 2016 Book PDF

Author : Ms.Marialuz Moreno Badia
Publisher : International Monetary Fund
Page : 110 pages
File Size : 49,9 Mb
Release : 2016-10-05
Category : Business & Economics
ISBN : 9781513560601

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Fiscal Monitor, October 2016 by Ms.Marialuz Moreno Badia Pdf

Drawing on an expanded data set covering emerging markets and low-income countries as well as advanced economies, this issue examines the extent and makeup of global debt and asks what role fiscal policy can play in facilitating the adjustment. The analytical framework explicitly models the interlinkages between private and public debt in analyzing the role of fiscal policy in the deleveraging process. Country case studies provide useful insights on what fiscal policy should and should not do to facilitate deleveraging while minimizing the drag on the economy.