Daily Management Review

CNBC: Italy is a greater threat to European banks than Turkey


08/16/2018


The ECB expressed concern that the current monetary disturbance in Turkey may create problems for European financial institutions. Yet, there is one more threat for the banking industry in the region. It is Italy and its future, reports CNBC.



pexels
pexels
"The situation in the country... in the next few months will determine the picture in the entire European banking industry for the next years," says ABN Amro strategist.

The economy of Italy takes the third place in the euro area rating. At present, the newly formed government of the country is working on the budget for the next year. The monetary plan will be carefully studied by watchdogs and by market players.

The Northern League and the Five Star Movement, which formed the coalition, criticized the EU's restrictions on government loans and expenditures.

Investors are afraid of raising pensions and government benefits in Italy, given that the country already has huge public debt (about 130% of GDP).

If market players do not greenlight the budget for 2019, which should be submitted around October, the the country's costs of borrowing may well grow, and this can have an impact on its neighbors. This may also result in problems for those banks that hold the debt of Italy.

In addition to the budget issue, analysts point at other factors that can create problems for banks of Europe. Rating agencies should update their estimates for the country in the coming weeks. Banks of Italy still have a great number of bad debts. Because of the ambiguity of politics in Rome, it is not easy to predict what can eventually happen in the banking industry.

Giancarlo Giorgetti, secretary of the government, said on Sunday that speculators are likely to attack Italian financial markets this month, but the country has funds for protection.

"I expect an attack [in August]," Giorgetti said in an interview with Libero.

"Markets are filled with hungry speculative funds that choose their victim and attack," the official said. "In summer, market volumes are small, and the basis for aggressive initiatives against countries can be laid. Look at Turkey. "

"If there is a storm [on the market], we will open our umbrella, Italy is a big country and it has the resources to respond, in part because of the large amount of private savings," Giorgetti said.

source: cnbc.com






Science & Technology

Tech giants face stricter government regulation in the US

Nestle's Head: Veggie meat is new megatrend

Huawei may introduce Android replacement in August

Are US high-tech investors causing brain drain in Europe?

'Russia's Google' Yandex Was Hacked By Western Intelligence For Spying: Reuters

Reuters: Chinese hackers were stealing data from IT giants for years

China's first solar power molten salt plant sets record

WSJ announces imminent start of Boeing 737 MAX flight tests

Study: Machine learning is five times more harmful for the environment than a car

Would Singapore Be The First One To Bring Lab Grown Shrimps To The Global Market?

World Politics

World & Politics

France announces new tax for air fares

Europe Concerned Over Iran Move To Breach Uranium Enrichment Cap

Singapore To Build ‘$296 Million’ Smart Next-Gen Army Training Centre

No More Sales Of E-Cigarettes In San Francisco?

US ‘Hell-Bent On Hostile Acts’ Even After Trump-Kim Agreement, Says North Korea

Italy avoids EU sanctions for high national debt

Trump allocates 4.6 bln to help migrants

Iran Says Trump’s Belief That US-Iran War Would Be Short Is “An Illusion”