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Government bonds in the hands of Italian families in the second half of 2023 recorded strong growth, exceeding 10%, driven by the rise in yields. The share at the beginning of 2022 was about half (5% of the total). The Bank of Italy indicates this in the Financial Stability Report. The increase in the share of families was counterbalanced by the reduction in the stock held by banks and insurance companies as well as by the Bank of Italy and the Eurosystem, in line with the ‘slimming’ of central bank balance sheets linked to the normalization of political monetary. Foreign holders of Italian debt securities have a share of around 20 percent. The average cost of the stock of securities in circulation reached 2.7 percent, continuing the growth phase that began in April 2022. The placement, however, continues regularly, with increasing quantities for medium and long-term securities and average yields at issuance falling from October 2023 high. Liquidity in the secondary market for Italian government bonds improved, the report added, and volatility remained stable. The Bank of Italy then recalls the record for a retail issue achieved by the third issue of the BTP Valore which raised 18.3 billion.
High debt risk factor for financial stability
High public debt “continues to represent a risk factor, particularly in the event of economic developments that are less favorable than expected”. The Bank of Italy’s report on financial stability highlights this risk in a situation that has generally improved compared to last November: the country’s financial stress indicator is in fact “at its lowest level in the last 15 years” and in the short term the uncertainty is linked to the possible worsening of ongoing conflicts and the persistence of high interest rates. The spotlight is therefore on the Debt/GDP ratio, also for those who deal with financial stability at Via Nazionale. The report reiterates the warnings provided by Via Nazionale in the hearing on the Def: “to return to a path of reduction, in line with the indications contained in the recent reform of the Stability and Growth Pact, it will be necessary to achieve a sustained strengthening of the product as well as a improvement of the structural deficit”.
Significant reduction in credit to businesses
Business credit fell sharply last year for all categories of businesses and was “particularly intense” for the riskiest ones. This was revealed by the Financial Stability Report of the Bank of Italy, which adds that this decline is also due to the decision of companies to use the ample liquidity available to repay loans at variable rates early in the face of their sudden increase in the wake of interest rates. reference. Credit conditions are relaxed for large companies, while among those with fewer than 50 employees, the share of those who have had their request for a new bank loan rejected increased (in the fourth quarter). The credit trend has no impact, in any case observe the report on the good health of companies.
Since the launch of the ECB’s restrictive monetary policy, Italian companies have in fact shown themselves to be “resilient” and “in perspective, even a possible further tightening of financing conditions and a weakening of the macroeconomic framework would have a limited impact on the vulnerability of the sector”. Financial leverage, as noted in the Financial Stability Report, decreased by 1.4 percentage points to 35.3% thanks to both the decline in bank debt and the strengthening of capitalisation. A healthy situation that is reflected in Bankitalia’s forecasts on the trend of banks’ impaired loans: some limited increases in the second part of this year, signaled by performing loans classified as ‘stage2’ and by late payments, and a slight worsening in the two-year period ’25-’26. This estimate is of an equally limited increase, certainly lower than the forecast made just a year ago, when there was still no visibility on the reversal of the ECB’s monetary policy.
Jump in serious cyber attacks linked to war in Ukraine
“Serious cyber incidents” reported by banks and other financial intermediaries supervised by the Bank of Italy increased significantly last year and half, writes the Bank of Italy in the Financial Stability Report, are “linked to the conflict in Ukraine ”, we read without any explicit reference to the intuitive nationality of the hackers. From the monitoring activity of via Nazionale it appears “that in 2023 financial intermediaries reported 30 serious cyber incidents, a significant increase compared to previous years (12 and 13 reports in 2021 and 2022 respectively). Attacks on the availability of services offered to customers (so-called DoS attacks), in some cases attributable to subjects linked to the conflict in Ukraine, are the most frequently detected in the last year (15 reports). The Via Nazionale report adds that the impact of these attacks was however limited, with service unavailability times never exceeding five hours. Cyber incidents relating to the use of malware and social engineering techniques have also occurred, as well as unauthorized access to intermediaries’ systems.
