Italy’s teetering banks will be Europe’s next crisis

Re:Italy’s teetering banks will be Europe’s next crisis by sievebrain on Monday July 11, 2016 @04:58AM (#12069765)

There is no intellectual dishonesty. Fixing the Eurozone's banking problems (assuming you believe those regulations would do the trick) is not the UK's problem and it's not the UK that blindly insists on a one-track, one-speed Europe: it's Germany and France that are wedded to that concept. They could easily have introduced new rules only in the countries that wanted them.

But regardless, the problem in Italy is simply that not enough people are paying back their loans. That's not something bank regulation is going to fix. Banks make loans, that's kind of what they do, and if a country collectively gets too bad at paying back those loans then it's gonna have a banking crisis.

[ Parent | on HN ]

Re:Italy’s teetering banks will be Europe’s next crisis by davidw on Monday July 11, 2016 @11:42AM (#12071797)

> But regardless, the problem in Italy is simply that not enough people are paying back their loans.

Bingo! Guy who "owns" apartment upstairs from ours in Padova stopped paying for it several years ago. He doesn't pay the apartment fees either, meaning we have to pay for him. He had his furniture and other stuff repossessed a few years back. In short, as far as we can tell, he's insolvent. And yet, he's still there, and the bank won't take action against him, because if they do, then it shows up as 'bad debt', rather than 'temporarily in arrears' or whatever.

[ Parent | on HN ]

Re:Italy’s teetering banks will be Europe’s next crisis by visarga on Monday July 11, 2016 @05:08AM (#12069801)

> Banks make loans, that's kind of what they do,

How naive. Banks have to take collateral and give loans only to people/companies that have good track record. What they did is to give loans to people who could not pay back, which is a fatal mistake for a bank.

[ Parent | on HN ]

Re:Italy’s teetering banks will be Europe’s next crisis by pjc50 on Monday July 11, 2016 @06:55AM (#12070183)

give loans to people who could not pay back

The people they lent to seemed like reasonable credit risks at the time - this isn't the same situation as US "subprime". Fundamentally there's no way to know whether a lender will be able to pay back, you can only make statistical guesses at the time based on limited information.

There's an additional problem in that NPL levels depend on the state of the economy as a whole, which can become a self-fulfilling prophecy.

(See e.g. http://english.mps.it/media-and-news/press-releases/2016/Pag...

Edit: MPS isn't even loss-making, at the moment. The cliff is not so close. http://markets.ft.com/research/Markets/Tearsheets/Financials...

[ Parent | on HN ]

Re:Italy’s teetering banks will be Europe’s next crisis by calibraxis on Monday July 11, 2016 @09:18AM (#12070816)

If you can get a country to likely bail you out, then "risky" loans are no-brainers. Because you externalize risks onto taxpayers.

Example: why does Obama get heavy support from the finance industry?

[ Parent | on HN ]