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Free AccessMNI: Italy Must Pursue Credit Market Overhaul - Official
By Silvia Marchetti
ROME (MNI) - Reform of Italy's credit markets must be pursued by the
country's next government in order to further consolidate the financial sector
and support business, a senior official told MNI.
"In these last five years, our government has introduced new tools and
smoother regulation to end Italy's excessively bank-centred system by supporting
businesses in accessing alternative credit sources," said the official, a
financial adviser to premier Paolo Gentiloni.
It is crucial that the ongoing reform process is not halted or undone by
whichever party or coalition wins the general election, he warned.
"The resilience of the banking and industrial sectors are complementary and
must be jointly strengthened in order to mitigate downward set-backs. That's why
the development of a more diversified financial system remains a priority for
Italy's economy," the source argued.
The new tools introduced by the current Democrat-led government, focus
mainly on support to small-and-medium enterprises and include long-term
individual savings plans, tax breaks to reduce the overall cost of IPOs, to
incentivize bond issues and to stimulate investments in innovative start-ups.
Mini bonds and venture capital funds have also been further boosted thanks
to cooperation between public and private operators, while the adoption of
consolidated international contractual practice has prompted the entry of
specialized foreign operators in the private debt placement market to help meet
firms' financing needs.
--PARTNERSHIPS
A recent agreement between leading industrial association Confindustria and
the ABI, Italy's banking lobby group, to ease credit loans by allowing
guarantees to be placed on offices, buildings and other properties as forms of
collateral.
"It is also crucial to build a new, efficient partnership between banks and
firms that may benefit both," the official said of the government-backed scheme.
The new measures have produced significant results, he noted, in particular
the individual savings plans, unknown tools in Italy's financial system until
last year. Total revenues from this front have so far amounted to roughly E11
billion. To encourage the demand by potential investors, authorities have
introduced tax exemptions.
According to the latest Bank of Italy data, in past years the total of
bonds in firms' total financial liabilities has almost doubled to current E150
billion in absolute terms. The number of firms issuing bonds is increasing --
and not just among large industrial groups, but also SMEs -- alongside a rise in
the number of IPOs.
The official stressed that it was paramount to "consolidate and accelerate
these trends, stimulate the growth of capital markets and improve the financial
stability of Italian firms".
--BUSINESS PICK-UP
Recent surveys suggest business confidence is finally on the up again with
solid gains for investments and exports.
"The outlook appears to be improving, yet more still needs to be done to
create a solid capital market for smaller firms, which remain the most
vulnerable to credit flows," said Paolo Bastianello, head of Confindustria's
'Made In' technical committee set-up to safeguard Italian products.
"Small and medium businesses make up almost 98% of Italy's industrial
backbone yet especially during the crisis they were the most penalised in
accessing bank credits," he said. "The trouble is, lenders are willing to help
big companies, but not small ones that badly need resources for investments."
--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com
[TOPICS: M$E$$$,M$I$$$,M$X$$$,MC$$$$,MI$$$$,MK$$$$,MGX$$$]
To read the full story
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.