The Bank of Italy will publish the results of stress tests of the nation’s banks so the public can know the financial strength of their lenders and investors may better understand what they are buying, the central bank’s governor, Mario Draghi, said.
“I am glad to see that gradually consensus in Europe is maturing for having the stress tests published,” Draghi, who is also a member of the European Central Bank’s governing council and the head of the Financial Stability Board, said today at a conference in Rome.
“It’s something that I have been supporting since the very beginning and is something that we are going to do in Italy,” he said.
European Union leaders agreed yesterday to publish the results of stress tests on major banks by the end of July in order to prop up confidence in financial institutions still coping with the aftermath of the 2008 market meltdown.
“I think we have everything to gain from publishing these results, because so far countries with good banks, countries with good financial structure have everything to lose from contagion,” Draghi said. “Not to disclose, not to show exactly how things are is one of the major sources of uncertainty in Europe right now and is one of major reasons why the overseas investors are actually pulling their money back.”
Bank of Italy Director Fabrizio Saccomanni said at the same conference that the release of the stress tests is “imminent” and will coincide with those of other European countries.
Alessandro Profumo, chief executive officer of UniCredit SpA, Italy’s biggest bank, praised the Bank of Italy’s decision.
“For countries with strong banks like Italy it’s absolutely a good thing,” Profumo told reporters at the sidelines of the same conference in Rome. “I think it’s a good thing for all, and certainly it’s something important for Italy,” he said.
Banking shares have been among the biggest decliners in Italy as Europe’s sovereign debt crisis fueled concern about the value of the investments. The MSCI Italy/Financials Index has fallen 19 percent this year, more than the 11 percent decline in the country’s benchmark FTSE MIB Index.
“The publication of the stress tests may help to restore market confidence,” Alessandro Frigerio, a fund manager at RMJ Sgr in Milan, said by telephone today. “As a next step, central banks should use and publish the same parameters to do the tests,” he said.
European Central Bank President Jean-Claude Trichet told reporters yesterday that he was “happy” that EU leaders reached a consensus on stress tests and said the results will be published in the second half of July at the latest.
Draghi, speaking today, also said that protectionism “remains the wrong answer” to fight the global recession and that euro-region governments need to better coordinate budget policy and set stricter conditions for meeting deficit goals.