Banks: Panetta says, ‘Mergers can strengthen the system’. Giorgetti: the government’s role as a shareholder in banks has come to an end

After Patuelli, it was Fabio Panetta’s turn to speak. “The global economy is going through a period of transition, influenced by two opposing forces. The first is the shock caused by the conflict in the Middle East, which has led to higher energy prices, increased uncertainty and reignited fears of supply chain bottlenecks. The second is the spread of artificial intelligence, which is driving investment, trade in high-tech goods and services, share price trends and – with them – household wealth and consumption,” said the Governor of the Bank of Italy in his opening remarks, before going on to highlight that the effects of these two forces are not uniform.

Whilst the United States “benefits from lower exposure to energy shocks and a strong capacity to develop and apply new technologies”, in China, “growth is underpinned by manufacturing and technology exports, but remains constrained by dependence on foreign energy supplies”, in the euro area, “rising energy costs have exacerbated an outlook already characterised by low growth” and “the contribution of artificial intelligence to investment,” he added, “is also more modest than elsewhere”. As a result, in the months following the start of the conflict, ‘household confidence has deteriorated; the outlook for service sector businesses has weakened. Inflation is currently hovering around 3 per cent, and is expected to remain above that level until early 2027’.

On the subject of banks, Panetta highlighted their central role in financing the Italian economy. “The share of credit has declined over time, but remains higher than in other major European countries, particularly for businesses. In Italy,” added the Governor of Palazzo Koch, “corporate bank debt now accounts for 14 per cent of the total of financial debt and equity, and 46 per cent of financial debt alone.” For the Governor, this central role entails a significant responsibility for banks, which “are called upon to maintain a delicate yet essential balance: meeting the financing needs of households and businesses with adequate creditworthiness, whilst at the same time preserving the quality of their assets and their own financial soundness”.

For Panetta, the mergers “initiated or announced” in the Italian banking sector are a process that “can strengthen the system as a whole, increasing efficiency and improving the quality of services to households and businesses”; however, these results are “not automatic”. Successful mergers, he added, “depend on the capital strength of the institutions resulting from the transactions, the sustainability of their business plans and corporate models, and their ability to realise effective synergies and integrate different structures, procedures and cultures. Consolidation must be judged on its ability to achieve these objectives, whilst at the same time preserving competition, pluralism and responsiveness to the needs of the real economy’.

On this point, the Governor emphasised that the Bank of Italy, in consultation with the ECB and the other national central banks, assesses ‘each transaction on the basis of these criteria’ and verifies ‘its compliance with the regulations’.

Following Panetta, Giancarlo Giorgetti took the floor. On the subject of credit institutions, the Minister for the Economy said that “they can and must help to steer the Italian economy towards a more sustained level of growth”. He added, with regard to bank mergers, that “they are not a value in themselves, except for shareholders, but they can become one for the country when they enhance the ability to boost the international profile of Italian businesses”.

The Minister for the Economy and Finance then turned his attention to fintech, which “can improve financial inclusion but may lead to a permanent shift of a section of the customer base – the youngest customers – who would be lost to competitors, including in the area of asset management. ‘It would be a shame,’ the minister remarked, ‘if foreign banks were to take advantage of this.’

The Minister for the Economy and Finance finally confirmed the sale of all the Treasury’s shareholdings in banks. He expressed his confidence that this would be the last ABI general meeting at which his ministry would be present as a shareholder in banks. “Our role as a public shareholder has come to an end,” he stated, without specifically mentioning the remaining stake in MPS or the two retail banks controlled by MCC that have been put on the market: BdM Banca and Cassa Orvieto.