Reading the diatribe on the People's Bank of Bari drops your arms. He drops his arms because no journalist is describing the problem, he's trying to explain it, or he's even trying to make him understand what the government is going to do and why.
So let's take the last balance sheet of the group.
You can find it here, it's a provisional 6 months ago.
If you look at it, discover something. The group has deposits (which means, people who left money on current accounts) for about 7 and a half billion euros.
Now, if someone said then: "let it close", it is seriously possible that "protecting depositors" is around a figure of around two / three billion euros, that is, those that are under one hundred thousand euros of deposit. We should see better how this plateau is composed of people who have left money in their current accounts. To be on the safe side we can estimate between 2 and 7 billion euros. Otherwise the result is that a blow is inflicted on the region which, with Puglia's GDP of ~ 65 billion, ranges from -3% to -7.5%.
At that point, the problem becomes "fail like". If it were made to fail by canceling the bonds, then those who gave the bank money in exchange for bonds would find themselves not receiving a lira. Not bad, you say, these are investments that therefore have a risk. I think the same way, but we are talking about inflicting a total damage of 1,969,362,000 euros to Puglia. About two billion euros. In a region that has a GDP of around ~ 65 billion, we are talking about a blow that alone makes -3% of the region's GDP.
We are already at -10% of Puglia's GDP.
Now let's ask ourselves a problem. Suppose all account holders want to leave the bank, and that the subscribers stop subscribing by asking for cash "in cash". What happens?
Well, if we only talk about private individuals, we are talking about a request for 9 billion euros in cash. Forget it. The bank would close its doors almost immediately, because the liquids do not have them.
And we are talking only about private individuals who put their money into them, because otherwise we would have to count another 4 billion in indirect deposits, between what is called private banking and other forms of brokerage and investment. Which makes another -6% of the Apulian GDP.
So: he who says he will let her fail is a fool. The Apulian economy cannot afford such a blow, with only 65 billion in GDP it is not rich enough to absorb such a blow. Bavaria, for example, has a GDP of 630 billion euros, about 10 times as much, so it could also afford something that would be ~ 1.6% of its GDP. But not Puglia, for which the loss would be ~ 16%.
Then there would also be systemic problems, that is, this:
Although the market ethic says "let it fail", a simple, less ideological and more pragmatic look suggests that it is not possible for the government to do so. The government is not only a regulator of the market, but a regulator of society and a regulator of the economy (which is not "the market": those who trade the market and the economy have very confused ideas).
The second useless controversy I see, coming from the grill, is the one that Bankitalia wants as an entity that should have solved the problem. He should have been vigilant. But things just aren't exactly that way.
If we look carefully at the balance sheet, the problem with this bank is not that it has deteriorating debts. Sure, he has them, but the problem is very different. In the table below you see the income statement. The negative figures are put in brackets because the minus sign "makes bad" and therefore the financiers make improper use of the round parenthesis.
This is not a bank that has impaired loans. Or rather, he has them (they are mentioned earlier).
This is a bank that has serious management problems. Operating costs rose 8.3% in one semester. This should be enough, but it is not a problem for the Bank of Italy. Bankitalia deals with many other things, such as the quality of credit and those things called "OCR".
But the problem with this bank is not a problem of OCR regulations (which the bank also has). The problem we read is different.
That bank is being picked up.
If you look at the whole budget, it speaks of a bank that works less. And I say that he works less because passive charges have also dropped, so he also asks for less money on loan, which is usually loaned to customers. Net commissions have fallen … by 231%.
Under these conditions, we see that expenses (operating costs) have increased by about 13 million euros.
Now, if a bank works less, it is expected that revenues will decrease at the same expense. Here we see a bank that has worked less, and fixed costs have increased. Not in a percentage sense, but in an absolute sense. 13 million euros more.
This is not a problem for the Bank of Italy. Bankitalia supervises the financial system and the quality of the credit, but ensuring that the bank functions in terms of productivity and market presence and is the task of the Board of Directors. It is the bank's shareholders who must keep an eye on operating costs.
Now, the budget does not contain a cross-section on the composition of operating costs. But if the bank worked less (he asked for less money on loan and therefore less on loan), what costs can grow?
Well, since working less you don't consume more electricity, you don't pay more rent and … the banks don't have so many other operating costs, only the remuneration of employees and managers remains.
Either they have hired more employees in the past half year, or they have raised the remuneration of employees who have, or distributed bonuses to management, for about 13 million euros.
But this decision is taken by the bank. If a company decides to raise salaries to managers for 13 million euros, it is free to do so. It is not the task of the Bank of Italy to monitor.
On why the bank works less there would be to investigate and it is certainly not written on the budget: it could be competition from other banks, a sign of the imminent disruption of the banking system, a wrong way of working, or the news of investigations have not done the bank too well. To decide why the bank works less, has fewer customers who ask for less services, an in-depth study is needed that is NOT a problem for the Bank of Italy.
But with 14 billion of collection, even if there were a few hundred million of non-performing loans, the problem with that bank is not that of the OCR parameters. Yes, it is a problem, surely there is a problem of deteriorated credits, (the draft of the balance sheet says it in black and white, and Bankitalia has already taken them back), but the bank's problems are NOT an effect of the impaired loans .
the bank, moreover, was commissioned precisely in accordance with a Bank of Italy decision, so it is not clear where Bankitalia would have failed to act.
But we are seeing the same script as the Ponte Morandi. He lets himself run, and when the authority moves to punish, he is reproached for having moved too late. How to say: "Dear policeman, since you arrested me AFTER the murder and not before, then the fault is above all yours. If you had stopped me, as it was your duty to do, the victim would still be alive. Why don't we talk about YOUR delay? "
Another regulatory aspect is that that bank is too large not to be a scalable bank. It means that by law (an adaptation to the European norms wanted by Renzi) the banks are not a family affair that is discussed between cousins. They may be early, when they are small, but when they are large they must become scalable, ie it must be possible for other entities with money to buy shares and become partners. This is to allow more people to control the situation: if there are more members, there are more eyes and more controllers. It's not enough, but it's necessary.
The People's Bank of Bari, on the other hand, has violated the laws and has been kept "closed". In this way, decisions have been taken "between us", and the decision to NOT comply with the regulations shows a precise desire to proceed in this way, a typical will of the Masonic world.
But even on this Bank of Italy had already expressed itself and acted. Di Maio was not the commissioner of the bank, nor was Conte. It was Bank of Italy. So to accuse the regulator of not having settled when the government was talking about other minchiatine when he was interrupted by the news is simply ridiculous.
The real problem in all these crises is simple: the government has not governed the country for at least 20 years, but limits itself to governing public opinion.
The controller, Bank of Italy, has done its duty by acting on schedule. Whoever was surprised is, if anything, those who were dealing with other telenovelas, rather than dealing with banks.
That public opinion deals with telenovelas happens thanks to a press and a journalism that define "a pack of leccaculo without dignity" is little.
That the government deals with telenovelas instead of the country is due, instead, to an electorate who, between pensioners and public employees, has the illusion of not being able to lose the acquired position.
The future is here to deny them, and the speed with which we have gone on to talk about MES talking about a banking disaster (which in reality are the same argument) shows that it is not a very distant future.
Then, that the Masons magistrates (and investigators) who poisoned Renzi today find themselves with their brothers the bank masters left uncovered by Renzi poisoned by their brother magistrates, is only Karma.
But if we go ahead, the point is simple: either the government spends what it takes to save the bank, which is around 900 million euros, or the loss will go from 7 to 14 billion euros.
Let's go now to the famous ESM. Whatever you say, the ESM is not designed to work under these conditions. It starts from the principle that a bank of such dimensions as to require intervention by the government is a public company, and that therefore it is possible to do split interventions between bad bank and good bank. In that case, the current account holders (who would end up in the good bank) would be saved, reducing the loss to "only" 7 billion maximum, all coming from bankers and investors.
The problem is: why is ESM so hard? Because ESM was born under the assumption that banks are banks. But if you observe the disproportion between direct collection and delivery, you discover that that bank is in fact a money-maker that does little credit and works little.
Is this a good reason to send bondholders to that country and cause a financial disaster?
If you mean the government as a market regulator, yes. If the government's problem is to let the market work according to its own rules, the correct answer is that investors were wrong to invest in an institution that was a bank and was just a safe. Moreover, it will be said, they have had enough time to leave, and they are still there.
If the government is understood as regulating the economy, things change. If the government is no longer an institution that must allow the market to function, but must guarantee that the economy works, then things change. They change because, obviously, a financial disaster, while respecting the rules of the market, does not allow the economy to function well.
The first choice to make, therefore, is the following: does the State act as guarantor of the functioning of the market, or as guarantor of the functioning of the economy?
The market aims to guarantee the performance of a certain game under certain rules. It means that the Lehman Brothers crack was a perfectly consistent crack with the market rules, so it was a non-event.
On the contrary, at the economic level the crack produced a disaster, and was an example to avoid. Just the same way, if we now let the Banca Popolare di Bari fail, we would be following the rules of the market, and the game would take place according to the rules. Everything's fine, and if the purpose of the state is to guarantee the functioning of the market, letting it fail is a success.
If instead the purpose of the state is to guarantee the functioning of the economy, then things are not like this: the fact that TWO THINGS ARE IN CONTRAST, however, shows a simple fact.
That the proper functioning of the markets does NOT guarantee the good functioning of the economy.
- Those governments that want to use the market as an indirect tool to govern the economy are wrong. The market can work very well and kill the economy.
- Governments should clarify, first of all, if they feel the task of guaranteeing the functioning of the market, or of guaranteeing the functioning of the economy.
The German government, to say it, has always told citizens to be an Ordoliberal, that is, to propose a version of the market "under the supervision of the State" to guarantee the functioning of the economy.
But the Italian government has always taken an ambiguous, if not turboliberist, position. To then intervene with inadequate means: if it had been said that the Italian state has the economy as its objective, and that the economy comes before the market, perhaps someone would have prepared instruments (financial and otherwise) suitable to solve these crises.
Because an account is to do the work that the citizens promised to do.
An account is to improvise.