€4.8 billion window-dressing to cover a growing €360 billion hole
Italy’s banks are trapped in the mother of vicious cycles. As long as Italy’s economy continues to stagnate, which it’s been doing for a good part of the last 20 years, much of the supposedly good debt currently on the banks’ books will also, sooner or later, end up putrefying.
It’s already happened to Banca Popolare di Vicenza, which, despite being rescued last year, is already in dire need of fresh funds. And now the same thing’s happening to the four smaller banks that were rescued in November. On Thursday Reuters reported that the four banks have admitted holding “sofferenze” — or loans to insolvent borrowers — worth some 540 million euros in gross terms at the end of June, up from €156 million six months earlier as loans previously considered as ‘unlikely to pay’ were reclassified as non-performing
But the problem goes a lot further and deeper than that…