As the financial and economic gloom deepens, Charles Kindleberger’s The World Depression 1929-1939 is probably among the books that officials at the Bank of Italy are picking from their shelves. Alessandro Roselli, the Italian central bank’s representative in London from 2001 until 2007, was in the front row when Europe’s financial capital was struck by the storm and reported back to Rome as the first waves broke over the city. But while Italy’s own banks have so far been spared the distress that financial institutions are suffering in the UK, few would bet that the crisis will leave them untouched.
“Italy’s banks avoided the first bullets but they need to be worried about the pain the real economy will feel. Some nasty stuff is coming out now,” says John Andrew, chairman of Eidos Partners, a boutique investment bank in Milan. During recent months, Eidos Partners has experienced an increasing call on its debt restructuring services. “Foreign banks are getting out of corporate lending in Italy and Italian banks will have to close that gap,” says Mr Andrew.
