There are ECB guidelines Italian banks have to abide by, including coverage for unsecured NPLs within two years and coverage for secured NPLs within seven years of the loan being made.
“Meeting the ECB’s guidance could require significant step-ups in loan-loss allowances each year until 2026 but the extent of extra provisioning will depend on the bank’s ability to keep executing its NPL reduction strategy previously agreed with the ECB,” said Fitch.
Italy’s economy is expected to grow this year with that growth expected to take off in the second half of 2019, according to Prime Minister Giuseppe Conte. Conte said he sees GDP growth there averaging 1% for 2019.
For more market trends around the globe, click here.