Italy’s banks see the light at the end of the tunnel

Italian banks have come through a challenging year as pressures — from regulators, markets and the economy — waxed and waned. Issuers and investors have had to navigate the looming introduction of the Bank Recovery and Resolution Directive, Total Loss Absorbing Capacity and Minimum Requirement for own funds and Eligible Liabilities, which have changed the dynamics between senior unsecured paper, covered bonds and capital issuance. The Italian market also felt one of the strongest impacts in the eurozone from the European Central Bank’s quantitative easing programme, which provided cheap liquidity and tightened issuance spreads, but in some cases appeared to drive investors away and into higher-yielding asset classes. Meanwhile, an economy clawing its way back to health continued to impose a heavy burden of non-performing loans, and legislative reforms left smaller players in the sector looking for merger partners. In this roundtable, held in early December, leading funding officials and bankers gathered to discuss these issues and more.