Intesa Sanpaolo announced a massive capital infusion to the tune of 15 billion Euros.
The capital will be introduced in two forms. Intesa Sanpaolo has approved 5 billion euros for new credit lines. Available to present customers of the bank, or new customers operating in the Italian market.
Secondly, the firm will offer 10 billion euros for existing San Paolo customers. This will be done by extending the amount available of the business’s current lines of credit.
These credit lines will have no initial payments. With both interest and principal payments deferred for (3-6 months) or longer depending upon necessity created by the crisis.
We are providing the equivalent of 1% of GDP to the Italian industry. Intesa Sanpaolo’s solidity and size make such extraordinary measures possible.Carlo Messina (CEO)
This much-needed liquidity is anticipated to have positive reverberations within the economy for weeks to come. We have already seen positive results as the Borsa Italiana is almost 3% at the time of writing.
Investor sentiment in the country has been slowing significantly due to fears surrounding COVID-19 and the reverberations it has created. Although an infusion of capital alone cannot alleviate the significant burden placed on the economy it surely will help.
When infection numbers start to slow and containment measures dissipate it is pertinent for Italian firms to have maintained the infrastructure needed to push forward. This huge step by Intesa Sanpaolo could help for things to move in the right direction.
Our goal is to safeguard the value of Made in Italy, the excellence of our value chains, and the strength of our exports. We are certain that the skills and resilience of Italian entrepreneurs will enable our industries to quickly regain ground and relaunch from a position of strength following this crisisCarlo Messina (CEO)
To understand the true impact of this measure we will need time. Only when quarantine measures begin to dissipate will we comprehend Italy’s true capabilities moving forward.
This move, however, is a positive sign. And should be tracked moving forward. Where and how these loans are utilized could have large implications for Italy and by virtue the rest of Europe.