Crisis and restructuring of the banking system in the italian Mezzogiorno

Crisis and restructuring of the banking system in the Italian

"Mezzogiorno" An example of geographical dualism

in the credit structure

Vittorio Amato

Vittorio Amato - www.docenti.unina.it/vittorio.amato

l  During the Nineties the Italian banking and financial system experienced a rapid and radical transformation.

l  We assist to an increase in the degree of concentration and to a deep restructuring.

l  This transformation led to a banking and financial system very different from the one designed in 1936.

A radical transformation


Mergers & Acquisitions l  Since 1990 (the year in which the Law Amato-Carli

redraws the national banking structure), the Italian banking system was hit by a deep mutation.

l  Consequences have been operations of concentration: l  mergers and acquisitions.

Between 1990 and 2000 over 200 acquisition


Mergers & Acquisitions Mergers & Acquisitions in the italian banking system

0

5

10

15

20

25

30

35

40

45

50

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

mergers

acquisitions


Less banks headquartered in the Mezzogiorno

l  The effects of the mentioned changes were remarkable on the Mezzogiorno credit structure .

l  Perhaps the most obvious ones are summarized in the drastic reduction of banks headquartered in the southern regions.


Less banks headquartered in the Mezzogiorno


The weight of SMEs

In an economy like the Italian and particularly the Southern,

where SMEs represent the predominant share of the productive system, the banking system plays a fundamental role in economic development.


Acquisitions & Concentration For the banking system of the Mezzogiorno, the changes

started with the 90s manifested through:

l  a large number of bank acquisitions by extra-area banking groups

l  an increase in concentration (due to the fact that acquisitions have been primarily aimed at small institutions, especially of “Cooperative Credit”, operating on a local scale).


Acquisitions & Concentration Percentage change in the number of banks (headquarters)

-50 -45 -40 -35 -30 -25 -20 -15 -10 -5 0

1996-2001

2001-2006

2006-2011

1996-2011

Mezzogiorno

Center

North


Savings & Drainings Among the main reasons of the expansion of the big

banking groups towards the southern regions are: l  the savings capacity of these regions

l  the possibility of draining funds to areas or sectors with higher returns.


Loans lower than deposits

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

loans deposits loans deposits

Mezzogiorno Center-North


Loans lower than deposits

l  In the southern regions, the level of loans tends to be progressively lower than deposits.

l  These regions represent financial markets which are "drained", for subsequent uses, in other regions of the country with higher yields or lower risk.


Concluding remarks

l  The consolidation of the Italian banking system has not changed the terms of the relationship bank-firm in the Mezzogiorno.

l  The Southern regions remain mainly markets for raising savings.

l  A normalization of the credit market is one of the main priority for the development of the Mezzogiorno.


Crisis and restructuring of the banking system in the italian Mezzogiorno

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