“From the examination of the balance sheets of banking groups in recent years it is very clear that the The main problem of the drop in profitability lies in the provisions required for the presumed losses on doubtful debts."This is what Andrea Scaglioni, scholar and balance sheet analyst at the Fiba Cisl National Research Office, observes when illustrating the situation of banks in our country.While bad debts represent a significant percentage of the total credit granted by the banking system, the ordinary revenues and costs that banks record are of an adequate size for normal business activity.”.
But between the first group of values and the second the dimensions are disproportionate!
“Let's use a physical analogy to compare the magnitudes. Bank loans are like a medium-sized mountain, about 1,800 meters (and billions of euros); of these, doubtful loans are as tall as the Chrysler Building in New York: more than 300 meters (and billions of euros). They cause write-offs as tall as the giant Christmas tree in front of Milan's Duomo, about thirty meters (and billions of euros). Personnel costs, which some believe need to be significantly pruned, are, by comparison, as high as an average cypress tree in the countryside, about twenty metres (and billions of euros).
The problem underlying companies' losses therefore stems from the enormous mass of credit already granted and not from the moderate cost of personnel!
So, to conclude the metaphor, to start making the banks earn money again you don't need a gardener...!
Paola Vinciguerra
CISL
