Banks, "the OK of the EU to the public rescue of a Landesbank is the sign of a turnabout. Which can benefit all EU countries"

We are all the same but some are more equal than others. It is the eternal, Orwellian, suspicion that it spoils the relations between states within theEuropean Union and that now finds new reason in the go-ahead to rescue with public funds of the German bank NordLB decided byantitrust of Brussels. In reality, the decision does not seem to conflict with the rules governing the subject but certainly in other cases, for example the Italian Tercas, the approach was different.

Let's briefly review the NordLB story. The Hanover bank was dragged to the ground by the deterioration of loans disbursed to the sector of maritime transport. In recent years the sector has paid excess capacity, in the face of the slowdown in traffic to and from the China. Thus of almost 20 billion of loans granted by NordLB, a third became "non-performing loan", Ie loans that will no longer be reimbursed or will only be partially repaid. Eroded from losses (2.3 billion red only in 2018) the capital of the German bank has fallen below the guard limits making an injection of fresh money necessary. However, NordLB is a public bank, its shareholders are in fact the Lower Saxony with 59%, the Saxony Anhalt with 5.5% and the rest is in the hands of a group of local banks. These are therefore the members called upon to recapitalize the bank.

The bailout was drafted last February, after a failed attempt to merge with the Helaba bank of Frankfurt. Lower Saxony will pay 1.5 billion euros to NordLB and undertakes to supply guarantees on any other losses quantified at around 800 million euros. The local coffers will provide another 1.2 billion euros "cash". Shareholder intervention was also orchestrated to reject the assault of two US private equity funds Cerberus is Centerbridge. Earlier this week, the European Union Competition Directorate ruled that this operation does not conflict with European rules on bank bailouts, urging the Commission to approve the bailout. "To give a correct assessment of this decision, one should know the final reasons in detail," he explains Salvatore Bragantini, former commissioner Consob who served as vice-president of Banca Popolare di Vicenza in the institution's rescue phases, after the bankruptcy of Gianni Zonin. "However", adds Bragantini, "European standards actually allow the intervention of public shareholders if this happens under the same conditions as private individuals would do. However, this is a rule with margins of discretion, difficult to prove, both in one sense and in another ".

On the same line also Angelo Baglioni, professor of political economy at the Catholic University of Milan and author of the book "Banks of fog", Which explains" the operation is formally legitimate since it is an already public bank that is saved by its shareholders, and this is a possibility contemplated by the rules in force. It is an operation that must take place at market conditions and the general management has deemed it to have been so ”. The fact that the intervention of the shareholders has also arrived in key defensive with respect to the possibility of a private equity funds transaction, it confirms that, all things considered, there was an interest in the institution also by private subjects. It is not a question of a bank decoction kept afloat against any economic logic. If the decision of the European authorities does not therefore appear to be in itself criticizable, it is true that in the past the line followed has been different. "Undoubtedly, in some Italian situations, more has been applied severity", Emphasizes Baglioni, who adds:" In particular it was a serious mistake to judge public aid for the interventions of the Deposit protection fund which is instead fed by private resources ". On this, however, was expressed last March the European Court of Justice banning the interpretation given by the Directorate-General for Competition in relation to the rescue of the Italian bank Tercas.

"It is possible, but premature, to affirm that Nord LB has had some kind of favorable treatment", however, Bragantini emphasizes, "the point is another. A general is in place afterthought of the discipline of bank bailouts. An afterthought that, it is true, starts from Germany who now finds himself having to deal with several internal problem situations but which, in the end, should bring benefits for all member countries". The recent statements by the German finance minister also go in this direction Olaf Scholz who recently opened to a strengthening of the banking union and the creation of one common European deposit insurance scheme.

@maurodelcorno

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