Italy Lenders Seen Cleansing Books Amid Bad-Bank Plans
Bloomberg - Feb 08, 2015
Italian banks, under pressure to bring their balance sheets in line with the European Central Bank’s health check, will probably set aside billions more for loan losses in the fourth quarter as the government considers a national plan for offloading their troubled assets.
Banca Monte dei Paschi di Siena SpA, the weakest performer in the 130-bank review, is likely to almost triple its loan-loss provisions to 3.2 billion euros, according to the average of six analyst estimates compiled by Bloomberg for Italy’s third-biggest bank. In total, the top five banks may set aside about 8 billion euros, company and Bloomberg estimates show.
The nation’s lenders are saddled with a record 181 billion euros of nonperforming loans that are hindering their ability to expand lending and holding back the country’s recovery from its third recession in six years. More than two years after the balance-sheet clean-up started, the government is considering creating a bad bank to accelerate disposals of problematic assets.
