Nationalization of Banca Monte dei Paschi di Siena SpA looks increasingly likely. This is expected to happen next week. Despite rescuing the bank by the state banking sector in Italy remains under pressure.
The latest data shows that the banking sector in Italy has about 360 billion dollars in bad loans. CEO of Banca Ifis SpA, Giovanni Bossi commented: "The problems of certain specific banks may be solved, but a complete overhaul of Italian banks’ business model is needed.".
According to the European Banking Authority bad loans of Italian banks are over 16%, which is three times above the EU average. Meanwhile, interest rates on deposits remain 1%, which is relatively high compared to what other European banks pay.
Additional negative factor for Italian banks is the large number of employees that are over 350,000 people and it cost about 64% of operational expenses, compared to Greece where this is 60%.
After the negative vote in the referendum in Italy and the surge in populist parties ready to oppose any government attempt to help the banks , the probability of a banking crisis in the country is increasing.
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