Intesa Sanpaolo is the largest Italian bank with assets of over €1 trillion and holds government bonds worth €72 billion. The second, Unicredit, against assets of 945 billion, has investments in sovereign bonds for 94 billion euros, the Italian ones amount to 42 billion. Banco Bpm (208 billion of assets) owns government bonds for 24 billion euro. However, the largest safe is that of the Generali insurance group
The bankruptcy of the Californian bank Silicon Valley Bank (Svb) has turned the spotlight on a hitherto underestimated side effect of interest rate hikes by central banks. In general, higher rates tend to boost bank revenues, but rising rates also reduce the value of assets bonds already outstanding, including government bonds. This isn’t a big deal if the bonds are held to maturity. At that point the issuer, whether state or company, will repay the entire amount title value, the same one to whom it was bought. Problems arise if the holder finds himself in the need to sell the securities in advance, as happened to Svb. In that case the losses can be significant. “Silicon Valley Bank suffered a management that led to a liquidity problem, had to sell assets, including Treasuries that had lost market value,” the US Treasury secretary summarized today Janet Yellen hearing in the US Senate.
There is more. Securities can be included in financial statements with various classifications and wordings. They can be classified as available for sale or to keep until expiry. In any case, to a greater or lesser extent, their value must be periodically adjusted to the market value. So there is an effect on the numbers in the balance sheet in any case and in some cases it can trigger the need to increase the capital, the first “protection” against possible losses. At the beginning of the week, the vice president of the ECB, Luis de Guindos, warned the finance ministers of European countries that some eurozone banks may be vulnerable to rising interest rates. The meeting took place after the bankruptcy of Svb but before the collapse of the Swiss group Credit Suisse, due to other dynamics. Guindos would have said that our institutions are much less exposed than their American counterparts but he also warned against don’t be complacent and warned that a lack of trust could trigger the infection.
What is the situation of Italian banks from this point of view? Given that there are no alarms and that the asset values of the large Italian banks are in line, and in some cases higher, than those required by the ECB, the amount of government bonds in their portfolios is conspicuous. Overall, according to the latest data from the Italian Banking Association, Italian government bonds alone amount to 381 billion euros corresponding to approximately 65% of the total portfolio which amounts to approximately 585 billion. Intesa Sanpaolo it is the largest Italian bank with assets of over one trillion euro and holds government bonds worth 72 billion euro. The second, unicredit, against assets of 945 billion, it has investments in sovereign bonds of 94 billion euro, those in Italy amount to 42 billion. bpm bank (208 billion in assets) owns government bonds for 24 billion eurosjust under 12 billion are in Italian bonds. Bperagainst assets of 163 billion ha 15 billion of government bonds, the Italian ones amount to 10.7 billion. Finally MPS (137 billion assets) with securities worth just over 20 billion euros. Large vaults of sovereign bonds are also the insurance groups (which are not included in the statistics Abi). The largest in the country, the Trieste group generalsowns some for 143 billion of which 44% Italians.
