Italian banks face 2019 funding crunch without ECB help
Most lenders are struggling to raise money while the European Central Bank is considering a new type of multiyear loan to avoid a potential liquidity shock
Milan — Many Italian banks are struggling to borrow on the private markets and want European Central Bank (ECB) help as they seek more than €55bn in funding this year. Even after removing the threat of major collapses by bailing out some of its lenders, Italy’s financial system is ill-equipped to support an economy at risk of slipping back into recession. Italy’s banks are still dealing with the bad debt left by the last downturn and another would risk new loans turning sour. Political uncertainty has meant a spike in borrowing costs for Italian banks since an anti-austerity government took power in 2018, with only heavyweights UniCredit and Intesa Sanpaolo able to raise unsecured debt. Bailed-out Monte dei Paschi said last week the ECB had warned it about the challenge of raising money this year, highlighting a pinch that was evident in the third quarter of 2018 when the Bank of Italy said €200m more in senior debt expired than was issued.
“Net issuance levels are truly worry...
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