Non-performing loans (NPLs) in the Italian banking system totalled €203.3bn in April 2017, and were a cause of widespread concern in Europe. “The economic situation [after the sovereign debt crisis] and poor credit control in the banking sector caused bad loans to pile up,” says Maddalena Martini, economist at Oxford Economics. “But there has been a significant effort to turn Italian banks’ balance sheets around.”
In April 2021, the country’s NPLs totalled €52.1bn — the lowest level for more than a decade. Underpinning this effort has been the Garanzia Cartolarizzazione Sofferenze (GACS) scheme, which was introduced in 2016, offering banks that securitise NPLs a government guarantee on the least risky tranche of debt.
