A disaster is on the horizon for banks: derivatives that have throttled local authorities could not be made. One moment. What are we talking about? The issue is long-standing, and well known in the national economic sphere. Several Italian local administrations, at all levels, have purchased derivatives in past years. Because they did it it matters little (even if it was only speculation, of course), the important thing was that it was done. In some cases, subscribing to these products has led to significant trouble, as they have not proven what they thought they were. Or they had other purposes than those stated.
Well known, then, was the fact that, when problems arose, those who would have to answer them, at the level of local authorities, apologized saying that they did not know the tools they had subscribed to. In short, big ignoramuses have made speculative operations with financial sharks without knowing what they were doing. Well, now the bomb has gone off. And it could have catastrophic consequences for banks and i checking accounts Italians. And huge benefits for local authorities (and, perhaps, businesses). Because? Try to think how much money the banks won’t see going back to their coffers after the Cassation ruling on the matter. Therefore, there is a disaster on the horizon for banks: derivatives that have throttled local authorities could not be made. Let’s clarify.
A disaster is on the horizon for banks: derivatives that have throttled local authorities could not be made
In the past 15 years, 797 local authorities have entered into derivatives with both Italian and, above all, foreign banks. Unknown and incomprehensible derivatives to most. That have always generated one thing. Billionaire holes in the coffers of Regions, Provinces and Municipalities. Among other things, many of these derivative contracts are still in progress, some even thirty years. The losses have been gigantic so far. They have been outlawed since 2014, but 149 local authorities are still involved. The amount they charge the state for this to date is monstrous. In addition to interest on debt, 250 million per year only for the derivatives themselves. Which, in reality, were bets disguised as insurance. Where the insured was the insurer to the bank that offered the product.
Eurostat has calculated that, from 2011 to today, the Italian state has paid 37.5 billion in interest for this matter. All additional public debt, of course. A figure equal to a thick financial. How much does the state have to pay for the rest? Almost the same figure, 36 billion pure. Basically the figure of the ESM that could help the nation to recover. But here’s the twist, the sentence that puts an end to everything. And that, in one fell swoop, allows the state to no longer pay its debts.
The coup de cassation
On May 12, the Court of Cassation, at United Sections, set principles that could be disastrous for banks. The contracts signed between banks and local authorities, in practice, are not valid, for a whole series of reasons. The complete sentence, for those interested, is found who. We are concerned with the fallout for banks. Which, as mentioned, could be dramatic. Because the Supreme Court’s ruling could also have a cascade effect on 90,000 derivatives sold to companies by banks. And also on various products sold to small savers. Understand that if all these tens of billions were not returned to the banks, their balance sheets would have a very hard blow. Which, in many cases, the available reserves could not fill. Failures, therefore, could be on the agenda. And when a bank goes bankrupt, the account holders’ money evaporates, unfortunately …
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