Impact of regulatory changes
The new regulations that came about in 2012 having most effect on Banca IFIS are set out below:
- The regulations for the prudential supervision of banks in force for the classification of past-due loans (Bank of Italy’s Circular 263) states that as from 1 January 2012 a loan is considered past-due when it exceeds the limit of 90 days as opposed to the 180 days applied up until 31 December 2011 when Basel II’s grace period to conform to the national limit of 90 days for classifying a past-due loan expired. With regards to Banca IFIS, this change led to a 27.3% increase in past-due loans as at 31 December 2011, mainly referring to Public Administration and recourse loans.
- The new regulation on payments, aimed at reducing enterprises’ collection times and consequently their need for credit, represents a further business opportunity for the bank. As the system’s overall financial needs are not containable if not in the long-term following a radical structural change involving first and foremost the Public Administration, the current effect of this new regulation is that of transferring the need for credit from one enterprise to another. Specifically, as far as concerns the production chain which is of utmost importance for Banca IFIS, trends show that the demand for credit has partially moved from the supplying company (mainly SMEs) to the buying company (usually much larger with a better credit-standing). Indeed, it can be seen that buying companies are favouring more and more the assignment of receivables by their suppliers in order to maintain current payment times, taking on the debt and relative costs involved in order to have payment times that are longer than those now foreseen by the law. Hence, if this new regulation, on the one hand, brings about a moderate reduction in Banca IFIS’s profitability (when considering the better creditworthiness of the buying company) on the other, it leads to a containment of loan portfolio risks (particularly the risk of protest and/or protested supplies) and also gives new opportunities for growth in an indirect manner through conventions with the buying company in collaboration with the supplying company.