The ongoing economic recovery
and government reforms are creating "opportunities" for Italy's
banks but "there is no instant cure" for them, Standard & Poor's
credit ratings agency said Friday in a report on the Italian
banking system.
"We now expect Italian economic recovery to gain momentum in
2016," the agency said.
S&P pointed to three weaknesses in the Italian credit
system: a high rate of non-performing loans, structural rigidity
and low efficiency, and fragmentation leading to difficulties
achieving economies of scale.
The government's reform of the so-called 'popolari' or
cooperative banks should lead to "consolidation between regional
and local banks", the report said.
S&P said authorities will likely be able to sell four
rescued cooperative banks, and the ongoing economic recovery
will be good for the banking sector as a whole.
The government's new public guarantee on non-performing
loans (GACS, in its Italian acronym) is a positive move but will
likely find restoring bank balances to health a slow and uphill
battle, the agency's report said.
This is why the S&P outlook on Italy's banks remains
stable, the agency said.
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