Italy’s Banking System on Verge of Nervous Breakdown
by Don Quijones
WolfStreet.com
October 30, 2016
The “Doom Loop” resurges.
One of the best indicators of whether a financial crisis is in full swing is when senior insiders begin to lose it in public. That’s precisely what happened in Italy on Thursday when Italian senior banker Giuseppe Guzzetti gave a speech at a conference in honor of World Savings Day, an international event that, unbeknownst to 99.9% of mankind, takes place every year on Halloween (Oct. 31).
During his address, Guzzetti admitted that Atlante II — one of two bad bank funds created to provide much-needed support to Italy’s crumbling banking sector (the other being its predecessor, Atlante I) — is chronically underfunded. The fund, set up in the spring to help Italy’s most fragile banks, in particular Monte dei Paschi, remove some of the most toxic debt off their balance sheets, has experienced six intense months of activity, “but is now out of breath,” Guzzetti lamented.
The admission is particularly important in light of Guzzetti’s current role, not only as the chairman of ACRI, an association of Italian savings banks and foundation, but also as the top man at Fondazione Cariplo, an influential “charitable” banking foundation. Cariplo is the largest shareholder of Quaestio Holding S.A whose deeply opaque Luxembourg-based subsidiary, Quaestio SGR, is the proud owner of Atlante I.
In other words, Guzzetti is as senior a banking insider as you’re likely to find. Presumably he knows just about everything there is to know about Atlante I and II. In fact, he helped create them. And now he’s deeply worried.
“The small number of contributions received so far threatens to seriously undermine the purpose for which Atlas was established: not only (or mostly) as a tool to manage some emergencies, but rather as an interventionary mechanism to create a true market for deteriorated credit.”
The Rest…HERE
