SNL Financial, the US headquartered provider of business data, has published figures suggesting that Italy’s banking sector faces a significant shortfall in its capitalisation of between €25bn to €70bn for those banks being reviewed by the ECB as part of the region’s ongoing stress testing activities.
Based on data from the ECB, SNL said that the sector lost money in 2011, 2012, and 2013, leaving both assets and profitability in a poor state.
This could result in a significant call for new capital to be injected to ensure the sector meets the Core Tier 1 capitalisation requirements, as being stress tested currently by the ECB, EBA and national banking regulators as part of the overall Asset Quality Review (AQR) of Europe’s biggest lenders.
SNL data suggests that the ratio of reserves/non performing loans across a swathe of Italy’s biggest banks averaged around 46%.
“NPL ratios at the end of June 2014 for all banks subject to the AQR were double-digit figures, ranging between 13.9% for Banca Popolare di Sondrio SCpA and 28.9% for Banca Monte dei Paschi,” SNL stated.