Credem and the other top Italian companies – Corriere.it
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Italian banks at the top
For example, for the Credem group, the Pillar 2 Requirement of 1.0%, the best parameter in Italy and in first place in Europe among commercial banks, says the Emilian bank, within the panel of institutions supervised directly by Frankfurt who have disseminated it. In reality, Pillar 2 is part of the capacity required of banks to cover foreseeable risks. Other considerations such as being a local or global (S) Systemically Relevant Financial Institution (SIFI) or additional leverage finance requirements such as those asked of BNP Paribas or Deutsche Bank also come into play in establishing robustness to savers. In December, however, Intesa and Unicredit had communicated that they had fully complied with the capital requirements, values of the Cet1 that still grew with the annual results.
Non-performing loans
The road to full solidity still has a long way to go: risk management, governance, digitization, the business model and the treatment of environmental issues need to be improved. For this reason, the number one in ECB supervision Andrea Enria calls for a prudent approach by banks in terms of risk management and provisions, given the growth in non-performing loans that has already begun in some specific portfolios such as consumer credit. European banks, faced with the developments of 2022, have planned a distribution of profits to shareholders in line with the previous year and on the basis of the information available to date, they will distribute 51% of the gross profits of 2022 this year, informs Enria. The 2022 SREP led to improvements in the capital requirements for non-performing exposures for 24 banks that did not meet the ECB’s coverage expectations for non-performing loans (NPLs) granted before 26 April 2019, reports the ECB bulletin.
Coupon compatible strategies
A greater capital endowment does not slow down but favors the lending capacity of banks in the long term, as demonstrated by some studies, argues the chairman of the Banking Supervisory Board Andrea Enria. The Supervisory Authority, in analyzing the plans and trajectories of the banks’ capital, has found that virtually all are compatible with the planned distribution of profits. However, Enria explained, in a limited number of cases the banks have reduced the distribution after dialogue with the Supervisory Authorityand some banks that had planned a large distribution wisely chose to stagger several tranches of planned share buybacks over the year, to remain flexible in response to macroeconomic developments.
War
Banks have weathered the economic impact of the Russian invasion of Ukraine well, thanks to their strong capital and liquidity positions, rising profitability and continued improvement in asset quality, Enria remarked. In short, the tsunami did not arrive. Thanks to the higher capital endowment and lower stock of non-performing loans compared to 2014 when the directives on recovery and deposit guarantee schemes became necessary. Despite a horizon that recommends attention and prudence, the increase in interest rates has led to an improvement in profitability and capital generation for European banks. According to Eurotower, the weighted average of the Pillar 2 requirements set for total capital remained in line with those established in previous years, at 2% of risk-weighted assets (RWA) after 1.9% in 2022. The average overall SREP score therefore remained essentially unchanged, with 92% of affected banks receiving the same overall score as in 2021, and with half of the remaining 8% seeing it worsen. In 2022, almost all significant banks reported Cet1 ratios above the new requirements and guidance.
Aggregations
For European banks, after the slowdown of these two years, the recovery of mergers will be inevitable, including cross-border ones to better focus on their business model, considers Enria, interviewed on Skytg24, according to whom European banks continue to quote at lower prices than the European rivals. According to the central banker, a better focus can also pass through mergers. We saw something in 2020, then the process slowed down, he underlined.
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