Smaller Italian banks with outdated business models at risk-Bank of Italy

ROME (Reuters) – Smaller Italian banks which can’t adapt to transformations that are reshaping the sector are at risk and the government should act to help them stay in business, a senior Bank of Italy official said on Thursday.

Speaking at a parliamentary hearing on the rescue of unlisted cooperative bank Popolare di Bari, Bank of Italy Deputy Governor Alessandra Perrazzelli stressed the importance of emergency measures approved by the government, including the possibility for state-owned bank MCC to buy stakes in banks to help them restructure.

“A crisis of banks rendered more fragile by their small size or their inability to modernize their business model is a concrete risk,” she said.

“We need to avoid a traumatic exit of these banks from the market. It’s not an easy challenge. Such banks are all over Italy but the South faces a situation, including in terms of context, that is particularly difficult,” she said.

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