Cleaning-up Bank Balance Sheets: Economic, Legal, and Supervisory Measures for Italy

Jose Garrido, Emanuel Kopp and Anke Weber

No 2016/135, IMF Working Papers from International Monetary Fund

Abstract: To stabilize and bring down nonperforming loans (NPLs) in the Italian banking system, the Italian authorities have been implementing a number of reforms, aimed among others at speeding up insolvency and enforcement proceedings, strengthening bank corporate governance, cleaning up balance sheets, and facilitating bank consolidation. This paper examines the Italian banking system’s NPL problem, which ties up capital, weighing on bank profitability and authorities’ economic reforms. It argues for a comprehensive approach, encompassing economic, supervisory, and legal measures. The authorities’ reforms are important steps toward this end. The paper describes measures that could further support their actions.

Keywords: WP; procedure; bank; security interest; Nonperforming loans; corporate restructuring; asset management companies; enforcement method; default probability; securitization transaction; NPL ratio; bank financing; asset quality; Banca delle Marche; NPL write-off; NPL problem; management experience; econometric methodology; Distressed assets; Loans; Solvency; Debt restructuring; Eastern Europe; Global (search for similar items in EconPapers)
Pages: 33
Date: 2016-07-11
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Citations: View citations in EconPapers (18)

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