Source: Nwo Report
A stress test conducted a few days ago by the European Banking Authority confirmed the poor condition of many credit institutions in Europe. Italian banks and Germany’s Deutsche Bank are doing the worst.
In recent months, Deutsche Bank shares have lost 25% of their value, French bank Société Générale — 23%, and Italian giant UniCredit — almost 30%. According to Société Générale’s Chairman of the Board Lorenzo Bini Smaghi, the entire financial system of the Eurozone is under great pressure.
The problems in the European banking sector have accumulated over a long period of time; the Brexitreferendum gave another powerful impulse, said RIA Novosti analyst Dmitry Dobrov. The referendum sowed panic among foreign investors and undermined confidence in the financial markets. Under these conditions, investors are afraid to invest money in all countries with weak economies, including Italy. That is why Italian banks were affected by the crisis in the first place.
What’s Happening to Italian Banks?
The Italian banking sector has about 360 billion euros of “bad” shares, which is about 20% of the total loan portfolio. About 200 billion euros of those are “irretrievably bad,” said Dobrov. The course of shares of Italian banks has fallen by more than half since the beginning of the year, and this aggravates the situation even more.
The collapse of one bank may lead to a chain reaction that would have catastrophic financial and political consequences, not only for Italy but also all over Europe.
According to data of the Bank for International Settlements (BIS), Italian banks have approximately 550 billion euros of loans from around the world, including 250 billion euros from French banks and 90 billion from German ones. In the event of a collapse of the Italian banking sector, Deutsche Bank alone would lose 30 times more than if Greece went bankrupt.