Italian banks’ bad debt plummets amid economic recovery
Second quarter GDP grew at fastest pace since 2011
Greater pressure from the European Central Bank on Italian lenders to improve balance sheets, along with a stronger appetite from investors for bad debts, has helped institutions reduce loans by nearly 10% month-over-month in July, reports the Financial Times. The volume of bad debt has shrunk to its lowest level since 2014.
The country’s financial sector has benefited from stronger economic growth, with GDP rising at the fastest annual pace since 2011. The economic recovery has helped corporate debt linked to the manufacturing sector fall by 6 billion euros since the start of the year, with industrial production jumping by an annual 4.4% in July.
A fall in bad debts was even steeper in the construction sector, which has benefited from stability in housing prices.