The recent troubles that Carige and Creval experienced in going to the market to raise new capital can be considered a confirmation of how needed and appropriate are detailed guidelines on NPL accounting and why the attempt of undermining this wise practice are senseless.
This year both Carige and Creval were allowed to offload some relevant NPL portfolios from balancesheet through securitization schemes involving GACs. The presence of Governmente guarrantee (even though paid at market price) has significantly reduced the impact on P&L and helped to smooth the consolidation process.
Nevertheless when the 2 banks have announced the project of capital increase larger than expected markets started again to question the fair evaluation of their NPL book.
Would the new ECB guidelines be already in place the higher transparency would have spared the troubles the 2 banks are experiencing these days.
Will Italian editors, politicians and bankers learn this lesson?
Yu can read my take on ECB Guidelines in this post
GLG – Gerson Lehrman Group – Council Member