Austrian banks strongly engaged in Italy
Austrian banks have a lot to lose in debt-ridden Italy, figures released today (Tues) show.
Financial market authorities announced that bank institutes based in the Alpine country invested 15.8 billion Euros in the struggling Eurozone member state which borders it in the south. They pointed out that Austrian banks’ exposure in Greece – which has received millions of Euros by fellow Eurozone members and the International Monetary Fund (IMF) – was comparably low at 2.3 billion Euros. All figures consider operations as of last month.
Engagements by Austrian banks in Italy do not consider liabilities and investments by Austrian insurance companies and funds. The exposure of Bank Austria (BA), which is part of Italy’s powerful UniCredit Group, are not part of the 15.8-billion-Euro calculation either.
The German Bundesbank institute revealed that German banks invested 82.8 billion Euros in Italy as of last March. Considering the size, political influence and economic strength of Germany, Austrian banks’ engagement in Italy is remarkable.
The European Union’s (EU) finance ministers are showing signs of nervousness as a growing number of analysts fear Italy could be the next EU and Eurozone member to apply for financial support after Greece did so in 2010. The Irish government followed the Greek example a few months later before Portugal decided to do the same earlier this year.
Asked how a similar scenario involving Italy could be avoided, Austrian People’s Party (ÖVP) Finance Minister Maria Fekter refused to reveal detailed plans. The former interior minister said it was important to “continue walking on the chosen path.” She added: “A zigzag course has to be avoided.”
Fekter stressed: “The crisis is not over yet. We are still busy carrying out stabilising measures.”
The Austrian finance minister added she was convinced that the Italian government would agree upon a cost-cutting programme to get its finances under control. Fekter explained it was important to create growth and competitiveness “especially in countries which are currently experiencing difficulties.”