The Life and Times of an Italian non-performing loan

The Italian banking system has had a large presence of bad or non-performing loans. Bad or "deteriorating" loans accounted for €331 billion and non performing loans accounted for €197 billion of the total deteriorating loans. This accounts for 21.4% of the total gross loans in Italy. The Economist argues that questionable lending practices, inefficient courts and long recessions account for the high amount of debt and bad loans.

The government has tried to curb the problem of bad loans by setting up securities and rescue funds to help  however, these programs have not worked as well as the government wanted. Now, the European Central Bank is getting involved and wanting the Italian Banks to curb bad loans and get a plan together to fix this issue.

While the ECB has stated that to fix this issue it is going to take time, some banks themselves are also instituting some reforms. They increased staff members, upgraded technological IT systems and instituted performance pay and saw collections increase by 92%.

This problem is not going away anytime soon but it is good to see that banks and the ECB are being more proactive before a breakdown in the financial banks and institutions. Similarly, instituting reforms on the requirements for getting loans might go a long way in curbing over borrowing.












https://www.economist.com/news/finance-and-economics/21719815-deep-roots-italys-bad-debt-problems-life-and-times-italian