Calendar provisioning, here is the ECB bomb for banks (according to Mediobanca). PwC Report

9 September 20204 years ago babelfish

What, and what does the "calendar provisioning" have been criticized by the managing director of Mediobanca, Nagel, in Parliament. The slides of a PwC report.

The "calendar provisioning", or the new ECB rules on non-performing loan coverage, represent the risk of "an atomic bomb" for bank balance sheets in post-Covid.

This was stated by the managing director of Mediobanca, Alberto Nagel , at the hearing of the Commission of Inquiry on Banks, according to which the entry into force of the measures risks determining the need for new recapitalisations in the next 2-3 years. The rules established by Frankfurt are "wrong" because "a bundle of grass was made".

“It will be a disaster for banks' balance sheets. A mechanical rule that applied to the post-covid situation is like an atomic bomb ", he said, speaking of the rules that impose faster provisions on non-performing loans, eliminating discretion and leading to devaluing NPLs by a third every year, including unlikely to pay, the so-called Utp. “You treat a live credit as a dead credit, instead the categories must be separated and automatism avoided,” explained Nagel.

"The risk is that we will have to recapitalize the banks in two or three years," he continued. However, for the CEO of Mediobanca, there is room for dialogue with Frankfurt since Andrea Enria has been in charge of supervision. “The ECB is very different: it has experienced the previous phase, it has a more active and productive dialogue with banks, the market and investors. With Enria there are the foundations for a dialogue on a reform of calendar provisioning ”, he concluded.

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This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/calendar-provisioning-ecco-la-bomba-bce-per-le-banche-secondo-mediobanca-report-pwc/ on Wed, 09 Sep 2020 13:00:30 +0000.