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BancoPosta leads Italian banks impressive Top 1000 performance

By shoring up their capital levels before the pandemic, Italy’s banks ensured their survival and even supported the country’s battered economy. Now it’s likely consolidation is on the cards. 
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Italy’s economic woes were piling up well before the onset of the Covid-19 pandemic. Between 1995 and 2019, gross domestic product per capita fell from 9% above the euro area average to 10% below it. Productivity growth was also lagging, while the country’s public debt position has worsened in recent years.

The pandemic has exacerbated many of these problems and introduced new ones. The economy contracted by 8.9% in 2020, its weakest performance since the second world war, while the Bank of Italy expects a recovery in the region of about 4% in 2021, which is below leading euro area peers. 

Despite this difficult macroeconomic situation, Italian banks have fared relatively well in The Banker’s Top 1000 World Banks Ranking 2021. This reflects the fact that Italian lenders, both large and small, took the opportunity to increase their capital positions at the end of 2019, a move that positioned them well to weather the worst of the global health crisis.

Supporting the country

Indeed, Italy’s banks have played an outsized role in supporting the national economy through an unprecedented crisis, effectively disbursing a range of assistance measures to individuals and businesses, and donating large sums to support the national health service and other organisations. 

The best performing Italian bank is BancoPosta, with an overall performance score of 5.78. Underlining this attainment is the lender’s table-topping achievements in terms of its asset quality, return on risk and liquidity metrics. It also does well with respect to its growth and profitability numbers.

In relatively close second position in the overall best performing ranking is BPER Banca with a score of 5.64, while in third place is Mediobanca with 5.58. Mediobanca’s strong showing is helped by its market-leading performance in terms of its leverage, soundness and operational efficiency numbers. 

Italy’s second biggest bank by Tier 1 capital, Intesa Sanpaolo, places fourth in the best performing table. This commendable result stems, in part, from the fact that it was the country’s fastest growing bank over the review period. In August 2020, the bank acquired control of UBI Banca, before merging by incorporation in April 2021. The move is expected to provide a sizable boost to Intesa Sanpaolo’s wider banking proposition over the coming years. 

Provisioning measures

Meanwhile, Italy’s largest bank by Tier 1 capital, UniCredit, secures ninth place in the best performing banks ranking with a score of 4.53. UniCredit entered the pandemic with a strong balance sheet but has taken prudent provisioning measures over the last 18 months to weather the economic turmoil from the health crisis. The lender scores well based on its liquidity and soundness metrics in The Banker’s ranking. 

Italy’s banking sector is likely to face a period of domestic consolidation as it contends with a more challenging operating environment, and one that is populated by too many financial institutions. Over the coming years, the landscape of Italian banking is likely to change considerably, with stronger, leaner lenders being a potential and welcome result of this transition.

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