Italian banks must cut costs to keep profits: central bank chief
(1 June 2016 – Italy) The Bank of Italy’s governor has said domestic lenders must look to quickly cut costs to help maintain profits.
On Tuesday, Bank of Italy’s governor Ignazio Visco said that Italian banks should look at a variety of ways to bringing to costs, including through layoffs, to support bank profits following more than €120 billion (A$183 billion) in loan writedowns since 2012.
At the central bank’s annual shareholder meeting, he said lenders face new challenges following the economic recession that put many small businesses into receivership. Visco highlighted factors such as negative interest rates, the need for banks to reduce financial leverage and shrinking fees due to progress in technology and increased competition.
"For many Italian banks it remains imperative to take steps to contain costs, including staff costs, by adapting the quality and quantity of personnel to new technological and market developments," Visco said.
He added that for smaller providers, issues stemming from the large stock of bad loans, little diversified sources of income and technological developments could be "acute."
"In several cases they must be dealt with by implementing far-sighted consolidation ... it is necessary to move rapidly in this direction, overcoming the outdated concept of (a) mere local presence which has often aggravated ... problems.”
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