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.
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...