Reading the diatribe on the popular bank of Bari makes your arms fall. He drops his arms because no journalist is describing the problem, trying to explain it, or even remotely trying to make people understand what the government is going to do and why.
So, let's take the latest group balance sheet.
You find it here, it's a tentative 6 months ago.
If you observe it, find out one thing. The group has deposits (it means, people who left money on current accounts) for around 7 and a half billion euros.
Now, if someone said then: "let it close", it is seriously possible that "protect current account holders" is around two / three billion euros, that is, those that are under a hundred thousand euros deposit. We should better see how this plateau of people who left money in checking accounts is made up. 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 "failing like". If it were made bankrupt by canceling the bond loans, 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 to Puglia for 1,969,362,000 euros. 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. Let's assume that all account holders want to leave the bank, and that the underwriters stop subscribing asking for the money "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 it doesn't have the liquid.
And we are only talking about private individuals who have put their money into it, because otherwise we would have to count another 4 billion of indirect deposits, between what is called private banking and other forms of brokerage and investment. Which makes another -6% of the Apulian GDP.
So: whoever says to let it fail is a fool. The Apulian economy cannot afford such a blow, with only 65 billion 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:
Even if market ethics says "let it fail", a simple, less ideological and more pragmatic look suggests that the government cannot do it. 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 exchange market and economy have very confused ideas).
The second pointless controversy that I see, coming from Grillina, is what Bankitalia wants as an entity that should have solved the problem. He should have watched. But things aren't exactly that way.
If we look closely at the balance sheet, this bank's problem 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 "is bad" and therefore the financiers make an improper use of the round parenthesis.
This is not a bank that has deteriorating credit. Or rather, he has them (they are mentioned earlier).
This is a bank that has serious management problems. Operating costs grew 8.3% in one half year. This should be enough, but it's not a Bankitalia problem. Bankitalia deals with many other things, such as credit quality and those things that are called "OCR".
But the problem with this bank is not a problem with OCR regulations (which the bank also has). The problem we read is different.
That bank is being stripped.
If you look at the whole balance sheet, it is about 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 given to customers. Net commissions plummeted … by 231%.
Under these conditions, we see that expenses (operating costs) have grown by about 13 million euros.
Now, if a bank works less, revenues are expected to decrease at the same expense. Here we see a bank that has worked less, AND THE FIXED COSTS HAVE INCREASED. Not in a percentage sense, but in an absolute sense. 13 million euros more.
This is not a Bankitalia problem. Bankitalia monitors the financial system and credit quality, but making sure that the bank works in terms of productivity and market presence is the task of the board. It is the bank's shareholders who must keep an eye on operating costs.
Now, the budget does not contain an overview of the composition of operating costs. But if the bank has worked less (asked for less money on loan and has therefore paid less on loan), what costs can increase?
Well, since working less you no longer consume electricity, you no longer pay rent and … banks don't have many other operating costs, only the remuneration of employees and managers remains.
Either they have hired more employees in the last half year, or have raised the remuneration of the employees they have, or have distributed bonuses to management, for around 13 million euros.
But this decision is made 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 Bankitalia's job to supervise.
Why the bank works less would have to be investigated and it is certainly not written on the balance sheet: it may be competition from other banks, a sign of the imminent disruption of the banking system, a wrong way of working, or 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 in deposits, even if there were a few hundred million impaired loans, that bank's problem is not that of OCR parameters. Yes, it's a problem, surely there is a problem of impaired loans, (the balance sheet writer says it black and white, and Bankitalia has already taken them back), but the bank's problems are NOT an effect of impaired loans .
the bank was commissioned in accordance with a Bankitalia decision, therefore it is not clear where Bankitalia would have failed to act.
But we are seeing the same script as the Ponte Morandi. She lets herself go, and when the authority moves to punish, she is reproached for having moved too late. As if to say: “Dear policeman, since you arrested me AFTER the murder and not before, then the fault is first of all yours. If you had stopped me, as was your duty, 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 European standards wanted by Renzi) 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 trend: if there are more partners, there are more eyes and more controllers. It is not enough, but it is necessary.
The popular bank of Bari, however, violated the laws and kept itself "closed". In this way, decisions were made "between us", and the decision NOT to comply with the legislation shows a precise will to proceed in this way, a will typical of the Masonic world.
But even on this Bankitalia had already expressed itself, and acted. It was not Di Maio who commissioned the bank, and neither did Conte. It was Bankitalia. So accusing the regulator of not regulating when the government was talking about other minchiatine when it 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 has limited itself to governing public opinion.
The controller, Bank of Italy, has done its duty by acting on schedule. Who was surprised was, if anything, who was dealing with other telenovelas, rather than dealing with banks.
That public opinion deals with telenovelas happens thanks to a press and journalism that define "a pack of lickers without dignity" is little.
That the government deals with telenovelas instead of the country is due, however, to an electorate who, between pensioners and civil servants, deludes itself that it cannot lose its position.
The future is here to deny them, and the speed with which we have gone about talking about MES when talking about a banking disaster (which are actually the same topic) shows that it is not a very distant future.
Then, that the freemasons magistrates (and investigators) who poisoned Renzi today are with the bank mason brothers left exposed by Renzi poisoned by their magistrate brothers, it is only Karma.
But if we go on, 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, ESM is not designed to work in these conditions. It starts from the principle that a bank of a size such as to require intervention by the government is a public company, and therefore split operations can be made between bad banks and good banks. In that case, account holders would be saved (which would end up in the good bank), reducing the loss to "only" 7 billion maximum, all from bankers and investors.
The problem is: why is ESM so hard? Because ESM was born under the assumption that banks do 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 government as a market regulator, yes. If the government's problem is to let the market function according to its own rules, the correct answer is that investors made a mistake in investing in an institution that pretended to be a bank and was just a safe. Besides, it will be said, they had enough time to leave, and they are still there.
If you understand the government as the regulator of the economy, things change. If the government is no longer an entity that must allow the market to function, but must ensure 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 ensure that a certain game is played under certain rules. It means that Lehman Brothers' crack was a crack consistent with market rules, so it was a non-event.
On the contrary, on the economic level, the crack produced a disaster, and it was an example to be avoided. In exactly the same way, if we were to make Banca Popolare di Bari go bankrupt, we would be following the rules of the market, and the game would proceed according to the rules. All right, and if the state's aim is to ensure the functioning of the market, letting it fail is a success.
If, on the other hand, the purpose of the state is to guarantee the functioning of the economy, then things are not this way: the fact that the TWO THINGS ARE IN CONTRAST, however, shows a simple fact.
That the proper functioning of the markets does NOT guarantee the proper 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, whether they feel the task of guaranteeing the functioning of the market, or of guaranteeing the functioning of the economy.
The German government, to say, has always told citizens to be ordoliberal, that is, to propose a version of the market "under state surveillance" to guarantee the functioning of the economy.
But the Italian government has always taken an ambiguous, if not even turbuliberist, 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 it is one thing to do the work that citizens have promised to do.
It's one thing to improvise.