FLORENCE, Italy, Oct 23 (Reuters) – Italian banks’ association ABI president said on Wednesday that banks should do more to secure medium- and long-term funding as the European Central Bank continues to scale back bond purchases and cash flows from banks. He said it would be a tough competition. financial system.
Italy has the world’s third-largest public debt, and the end of the ECB’s support for bond purchases will create a refinancing challenge for the Italian government, which will compete with the country’s banks for savers’ funds.
ABI Chairman Antonio Patuelli said that despite falling interest rates, competition from states would continue to increase pressure on lenders to repay deposits as they mature. The ECB cut interest rates for the third time this year last week.
“Let’s keep in mind that the ECB is reducing its purchases of government bonds,” Patuelli said at a press seminar in Florence.
“This…determines the intensification of competition for investment liquidity with maturities.I emphasize this because once maturities…banks will not be able to finance 20-year mortgages with site deposits….Click .
Italian banks have been criticized for not rewarding depositors when the ECB raises interest rates in 2022-23. ABI states that checking accounts are not a form of investment, but a service.
The rise in interest rates on term deposits is even more pronounced, although fixed-maturity deposits are not widespread in Italy. Although these are primarily used by digital banks, large lenders tend to avoid this more expensive form of financing.
Patuelli also said Italy paid high interest rates to ensure strong demand in Tuesday’s bond sale.
Banks raise funds at higher interest rates than government bond rates.
“Yesterday’s sale went very well and interest rates rose significantly. The two are closely related,” he said.
Italy’s new seven-year bond on Tuesday attracted orders worth more than 99 billion euros. Replenishment demand for 30-year bonds exceeded 101 billion euros, the highest total demand for Italian dual-tranche bond sales ever.
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Report by Valentina Za. Editing: Mark Heinrich
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