NPLs and real economy


Currently, the NPL-related issues have assumed great relevance and topicality. Every day the major newspapers and newscasts deal with these topics, either directly or indirectly. For example, the most recent novelties include the establishment of the Atlante Fund and the publication of the latest data concerning the non-performing loan amount and type.

Perhaps, contrary to the attitude of the market players, the core issue has not been touched yet and only palliative – or surely not incisive – remedies have been adopted so far.

Let us make some reflections:

– Surprisingly, no one (!) has highlighted the fact that many outstanding claims are the result of a decreasing or unsustainable economy, with no prospect for the future improvement of this economy and the solution of the major problems of this generation (for example, among others, youth unemployment and unsustainable pension system.). This means that these non-performing loans – once allocated in the medium term – will be followed by many others. Back to the drawing board.

– More than 70% of the Italian non-performing loans refers to 3% of the individuals involved, while over 80% of the Italian non-performing loans indicates loans granted to companies. If NPLs are a quantitative matter, then we should start from here. Currently, general measures are being applied (to 97% of the individuals involved) and no special remedies have been undertaken for the SME credit, thus leaving the initiative to personal actions.

– Considering the above, it makes no sense to assume that the NPL market – especially with the present structure – may have influenced our economy, since it was and still is rather an effect of economy itself. The actual element underlying the economy is the real economy, i.e. wages, consumption and primary needs goods.

It is not written on tablets of stone that, once the NPL stores have been emptied, the banks will grant new funds to indebted subjects who receive unstable income. The agents operating in this market (or at least most of them) properly carry out their job and act with the utmost professionalism within a context which needs it so desperately; however, we cannot tip the balance of economy, contrary to what the media say

Real economy actually plays a decisive role and policy should deal with it.

Emanuele Grassi