Italian Political Parties Are on Paschi's `Worst Borrowers' List

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(Bloomberg) -- With 46 billion euros ($57 billion) of non-performing loans, Banca Monte dei Paschi di Siena SpA knows a lot about unreliable debtors. Among the worst? Italy’s political parties.

About 97 percent of the 10 million euros ($12.3 million) Monte Paschi has loaned to 13 Italian parties is now classified as non-performing, the lender said in a written answer to shareholders at its annual meeting in Siena Thursday. Paschi said most of the loans were included in a package of about 24 billion euros of bad debt it plans to offload. The bank did not specify which parties it made loans to.

Italy banned public funding to political parties starting in 2017. Prior to that, parties and parliamentary groups enjoyed a number of direct and indirect benefits including reimbursements for campaign expenses, lower taxes and direct fund transfers based on their size. Parties can still receive donations from private citizens.

Legal restrictions on funding to parties served to curtail campaign activity before Italy’s March 4 general election, with politicians across the spectrum -- from Luigi Di Maio of the anti-establishment Five Star Movement, to Matteo Salvini of the anti-migrant League, to billionaire ex-premier Silvio Berlusconi -- focusing more on TV interviews and social media than on costly public rallies.

President Sergio Mattarella’s talks with parties on forming a government are ongoing, after the March vote resulted in a hung parliament. Di Maio is among the strongest backers of further cuts to party financing.

Paschi to Finish $30 Billion NPL Securitization by May, CEO says

Monte Paschi is accelerating its NPL securitization program as the European Central Bank raises pressure on Italian banks to clean up balance sheets weighed down by more than 270 billion euros of bad debt, more than twice the amount of any other European Union country.

The lender said Thursday it expects to complete the planned sale of 24 billion euros of NPLs in May, a month ahead of schedule.

©2018 Bloomberg L.P.

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