March 26, 2023

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Warning from the European Central Bank: “Beware of government bonds on banks’ balance sheets”. In Italy it is worth 585 billion euros

Intesa Sanpaolo is the largest Italian bank with assets of more than €1 trillion and holds government bonds worth €72 billion. The second, UniCredit, for assets amounting to 945 billion, its investments in sovereign bonds amount to 94 billion euros, while the Italian investments amount to 42 billion. Banco Bpm (208 billion in assets) owns €24 billion in government bonds. However, the biggest safe is that of the Generali Insurance Group

California bankruptcy Silicon Valley Bank (Svb) has highlighted the impact of collateral which has not yet been appreciated due to interest rate hikes by central banks. In general, higher rates tend to boost banks’ revenues, but higher rates also reduce the value of assets bonds already existing, including government bonds. This is not a big deal if the bond is held to maturity. At this point, the issuer, whether a country or a company, will pay the full amount Title value, the same person it was bought for. Problems arise if the holder finds himself needing to sell the securities in advance, As happened to Svb. In this case, the losses can be significant. The US Treasury Secretary summed up today: “The Silicon Valley bank suffered from a management that led to a liquidity problem, and it was forced to sell assets, including Treasury securities, which lost their market value.” Janet Yellen Hearing in the US Senate.

There are more. Securities can be entered in financial statements in different classifications and wordings. can be classified as Available for sale or keep it until expiration. However, to a greater or lesser extent, Its value should be adjusted periodically according to the market value. So there is an impact on the numbers on the balance sheet in any case and in some cases it can lead to the need for a capital increase, the first “protection” against potential losses. At the beginning of the week, the vice president of the European Central Bank, Luis de Guindos, European finance ministers warned that Some eurozone banks may be subject to higher interest rates. The meeting took place after the bankruptcy of Svb but before the collapse of the Swiss group Credit Suisse, due to other dynamics. Guindos could have said that our institutions are far less exposed than their American counterparts, but he also cautioned that Don’t be complacent He warned that a lack of confidence It could lead to infection.

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What is the position of Italian banks from this point of view? on condition There are no alarms And that the asset values ​​of the large Italian banks are in line with, and in some cases higher, than those required by the European Central Bank, the amount of government bonds in their portfolios is evident. In general, according to the latest data from the Italian Banking Association, only Italian government bonds are reported 381 billion euros accounting for approximately 65% ​​of the total portfolio which amounts to approx 585 billion. Intesa San Paolo It is the largest Italian bank with assets of over €1 trillion and holds €72 billion worth of government bonds. the second, unicredit, With assets of 945 billion, its investments in sovereign bonds amount to 94 billion euros, and its investments in Italy amount to 42 billion. Bpm Bank (208 billion in assets) owns government bonds to 24 billion eurosjust under 12 billion in Italian bonds. BieberFor assets of 163 billion hectares 15 billion Of government bonds, Italian bonds are at 10.7 billion. Finally MPS (137 billion assets) with securities of just over 20 billion euros. Large sovereign bond treasuries are also insurance groups (which are not included in the stats my dad). The largest in the country, the Trieste group generalsHe owns some of them 143 billion Of them, 44% are Italians.