Why the banks don’t bully Meloni and Salvini for the no to the ESM
What did the president of the ABI, Patuelli, say about Parliament's no to the ESM, the mood of the bankers with respect to the government and beyond…
Antonio Patuelli throws water on the fire and avoids entering the "Mes yes/Mes no" quagmire in the aftermath of the Chamber's decision not to ratify the reform of the European Stability Mechanism. The new ESM would have given the state bailout fund greater powers to resolve bank liquidity crises and the possible bankruptcy of a credit institution.
Now, in case of banking crises, there is the Single Resolution Fund which is fully operational. But the "backstop", which should have come into force from January 1st if everyone had ratified the reform, was in fact an extra network: a 70 billion credit line, which countries will be able to access if their national funds for banking resolutions (bank and non-public resources) are not sufficient.
But for Italian banks, Parliament's vote is not a drama. Not even for the markets: today the BTP-Bund spread was not affected by the Italian no.
Here is what Patuelli said, what the moods of the bankers are and the words – of different orientations – of the central bankers.
WHAT PATUELLI SAID ABOUT NO TO THE MES
In the interview with Repubblica, the head of the ABI wanted to clarify : “The question is not whether or not to join the ESM. Even with the vote of the Chamber, Italy continues to remain in the old ESM with all the other countries". Patuelli believes that the debate on the ESM "has been loaded with excessive political meanings, and this is why we have never expressed our opinion on the topic, not even at our Annual Meeting".
NATIONAL CONCERTS TO SAVE BANKS
As regards banking crises, the number one at Palazzo Altieri recalls that "all banking crises from 2015 to today have been addressed with national resources. That of Montepaschi with state resources and the others with resources from competing banks. Fortunately, now no one fears banking crises anymore, but in the most difficult moments, and during the old ESM, we did it ourselves. We even saved Popolare di Bari, which then went to the state." On the ratification of the Stability Pact by Palazzo Chigi, Patuelli clarifies: "The Stability Pact was a European agreement from thirty years ago, it was part of the Maastricht project, making the adoption of the euro possible which had many positive repercussions , keeping rates and inflation low. The Stability Pact was then suspended with the start of the pandemic: the revision work that has been done in this two-year period is important work, the mechanism that emerged from it is more oiled, less rudimentary than the old agreement. It takes into account everything that has happened in these thirty years, including the birth of the Banking Union, 9 years ago. It is a mature compromise, which does not slow down development. And in any case we couldn't think of making the public debt grow indefinitely."
PATUELLI'S WORDS AND THE ROLE OF INTESA SANPAOLO
Patuelli's position cannot be considered extemporaneous. Due to Patuelli's not only banking but also institutional experience, if the president of the ABI did not criticize the parliamentary vote it means that the approach of the top management of the banking association is aligned with those of the associated banks. On the other hand, the regulatory outcome of the so-called tax on banking extra profits was positive for credit institutions, compared to the government's tonitruating intentions which were then moderated and therefore completely overcome . For this reason, ABI's criticism of the government majority that voted against (Fratelli d'Italia and Lega) or abstained (Forza Italia and Noi Moderati) could not be foreseen. Also for the systemic role such as that played by Intesa Sanpaolo, which with company head Carlo Messina has never had an anti-government posture, as can also be seen from the latest interview given to the newspapers.
THE CLAIM OF THE ITALIAN METHOD
But not only. Patuelli's claim for national capabilities – thanks to state interventions as in the case of MPS and thanks to mixed public-private systemic solutions as in other cases ( Veneto Banca and Popolare di Vicenza ), not to mention purchases of small, limping banks by large institutions – it is a medal that the Italian banking world pins like a medal to its chest. And then – an insider mischievously comments – it's better to wash dirty laundry in Italy than to have a banking crisis managed in Europe as in the case, perhaps, of the Banca Popolare di Ragusa".
BUT HOW HAD THE BANKING WORLD EXPRESSED ITSELF ON THE ESM IN THE PAST?
If Patuelli scales back the scope of the ratification of the ESM reform, with a de facto assist to the government majority and to the positions of the executive expressed by the undersecretary to the presidency of the Council, Giovanbattista Fazzolari, in recent months the world of credit had not shown the same attitude. Pier Carlo Padoan, Minister of Economy during the Renzi and Gentiloni governments and now president of the Unicredit group, criticized such a choice just under a year ago. Live from Davos, on Sky TG24 , he defined it as "reputational damage" for our country, as in his opinion the ESM was not a "source of instability". But Padoan, also given the absence of positions of the number one of the Unicredit group, Andrea Orcel, had perhaps allowed himself to be too caught up in his political soul which notoriously does not throb for the centre-right.
THE WORDS OF CENTRAL BANKERS ON THE ESM
At the end of March, the then governor of the Bank of Italy, Ignazio Visco, during his last annual report, did not hold back on the topic which has now returned to the fore following the parliamentary vote: "One cannot fail to underline the need to bring about completion of the Banking Union, through a review of the current crisis management regulations as well as the establishment of a single deposit guarantee scheme". And again: “The recent phenomena of instability observed outside the European Union clearly show the importance of achieving these objectives”. Finally, increasingly clear: “As soon as its reform is fully operational, the ESM will be able to play an important role by providing a financial safety net to the single resolution fund”.
His successor, Fabio Panetta, who took office on November 1st, is absolutely in line with Visco. In August, still as a member of the Executive Committee of the ECB , in an article published in Politico, he wrote: "A cornerstone of this strategy is the creation of an integrated capital market at European level, a project launched by the European Commission in 2015 and known as the Capital Markets Union.” In this process, however, he highlighted two critical points: “The first is the absence of a risk-free sovereign bond issued on a stable basis by the EU. Historically, the most advanced capital markets have developed around a sovereign bond. In the United States, for example, the capital market was formed in parallel with the growth of the market for public securities issued by the federal government." To this we must add a second weak point: the lack of a complete banking union. “Banks – noted Panetta – play a crucial role in the functioning of all the main capital markets. They operate – usually with a leading role – in important segments such as asset management, underwriting and classification of bonds, stock market listing operations and financial consultancy. They play an active role in both equity and fixed income securities markets everywhere, often providing market-making services.”
In short, for the current number one at Palazzo Koch, it was difficult to "imagine a real UMC without the main market players – primarily the banks – being able to operate freely in the entire European market. The global landscape is changing rapidly, and Europe must place itself at the forefront of change. To achieve this, it needs a real capital markets union."
After all, Panetta sul Mes has always had clear ideas. “There are no major changes in the ESM reform and we must see it as a sort of insurance that must be made now that no country is in difficulty on the markets or with its public accounts” the then candidate for the ECB board stated during a hearing in the European Parliament. “It is the right time to introduce it because no country is in crisis, or under deficit procedure, states can access the markets on good terms and no one seems to need the ESM” which is designed “to strengthen the eurozone.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-le-banche-non-strapazzano-meloni-e-salvini-per-il-no-al-mes/ on Fri, 22 Dec 2023 14:25:54 +0000.