In Italy, regulators are currently working to configure a bad debt company of sorts to help Italian banks deal with a rising non-performing loan problem. Earlier this year, Economy Minister Pier Carlo Padoan called a meeting in Rome with executives from Italy’s top financial institutions on Monday to hash out a plan for a state-backed fund to acquire bad loans and cover capital shortfalls, reports Silvia Aloisi for Reuters.
“About 24 percent of EWI is made up of financials. The problem is that Italy’s banks are burdened by about $400 million worth of loans, sending investors fleeing from these financial institutions. Many of the country’s banks have seen their share prices plunge by more than half this year alone, with flagship names like the Monte dei Paschi di Siena falling by almost 80 percent,” reports CNBC.
Related: Help for the Italy ETF
Italian banks’ bad loan problem has “beome more pressing during years of economic stagnation. A highly fragmented and inefficient industry doesn’t help — Italy has more than 600 banks, supporting 52 bank branches for every 100,000 adults. Germany has 14 bank branches per 100,000 adults, and the United States 38,” according to CNN Money.
Click here to read the full story on ETF Trends.
