Day by day, the role of banks in Italy, located in southern Europe, is strengthening amid global and regional economic challenges around the European continent, which is trying to overcome the effects of the Corona epidemic crisis and the Russian-Ukrainian war. Bringing inflation rates around the world to record levels.

Over the past three years, Italian banks have enjoyed record profits as a result of high interest rates, which have necessitated the mobilization of central banks around the world to control inflation. However, as inflation nears its peak and the path to monetary easing begins, banks will have to find unconventional solutions to keep up with the pace of profit growth and come up with new investment vessels.

Alessandro Lulli, head of the treasury and finance group of the Italian “Intesa Sanpaolo” group, says that the most profitable way to organize a business is to achieve full integration and control of all value chains.

Lally mentioned the role of insurance companies in innovating insurance products and services and protecting against the ever-increasing risks around the world. To prepare products and services that we believe are best for our customers, the banking business is a large-scale business and we try to bring it together and clarify the integration process in everything we offer to customers.

In 2019, “We created a platform that includes 6 billion discounted loans, where we decided to earn less on green or circular loans,” Luli Asharq told Al-Awsad. You are a zero waste situation. We are committed to transitioning towards a greener world. Most of the bonds we have issued in international markets are green bonds, so we commit to raise funds and use them for green debt.

He said, “With inflation, the CEO of the bank decided to give each employee 500 euros and then an additional 500 euros. He initially conceded to the unions’ demand for a salary hike of about 9 percent because of inflationary pressures. During the Covid-19 crisis, we have decided to allocate 100 million to support the health system in the country, and low-cost loans for less developed social areas and in central and southern Italy.

The orientation of banks in Italy is inseparable from the economic situation of the European continent, which is still affected by the energy crisis, which resulted directly from the Russian-Ukrainian war, and which does not put pressure on the general budget of the countries. Public debt in Italy is around 3 trillion euros.

As raising interest rates slows economic activity, Italian banks face the dilemma of falling into the trap of economic recession or embarking on a path of deflation.

However, “the private sector in Italy is very rich, because the wealth of the private sector is 11.4 billion euros and it has a very low level of debt, and the ratio of household debt against disposable income is 61 percent, while real estate loans in Italy are fixed for 5, 10 or 20 years. Interest rates can reach 63 percent, according to Alessandro Loli.

The Bank of Italy (Central Bank) said in mid-August that the average annual interest rate on mortgages in Italy rose again in June, reaching 4.65 percent compared to 4.58 percent in May.

Variable mortgage payments increased dramatically due to the European Central Bank’s policy of raising interest rates to combat high inflation. However, the central bank added that the average consumer credit ratio declined to 9.03 percent from 10.43 percent in June due to the impact of renegotiations.

And many Italian banks took precautions and refused large credit facilities at variable interest rates, fearing defaults, which would almost certainly result from global economic and geopolitical changes.

The recent period has witnessed the bankruptcy of many banks in America and the failure of some banks in Europe, which increases the challenges for banks, which are now seen as the biggest winners as a result of the global inflationary crisis. In some countries, this matter has even reached the level of “greed” for bank profits.

Last August, Italian Prime Minister Giorgio Meloni’s administration approved a 40 percent surprise tax, blaming the European Central Bank’s continued interest rate hikes.

It was decided that by 2023 “banks should claw back 40 percent of their extra billions of euros in profits.”

Antonio Tajani, the deputy prime minister at the time, pointed out that the European Central Bank “is wrong to raise interest rates, this is an inevitable consequence”.

The decision came shortly after Italian banks reported huge profits, and Intesa Sanpaolo and UniCredit raised their full-year forecasts for a second straight quarter on the back of the European Central Bank’s rapid tightening of monetary policy. According to estimates by Citigroup, the tax will affect 19 percent of banks’ profits. Despite the tax cut after the shock of the markets, it remains a big challenge.

For his part, Andrea Fzollari, head of the governance systems and strategic initiatives department in the international banking sector of the “Intesa San Paolo” group, believes that there is a set of axes that will help prepare and face future challenges. “First these axes improve the speed of development and performance.” This means, “Increasing the strength and solidity of our presence in different markets, even with the integration of our model or structure, we should always increase its strength. Make it to cover the largest amount of different sectors.”

The second axis is related to digital transformation, which “represents great importance, so we are keen to increase our investments in it in the current period,” while the third axis is “growth in wealth management and insurance,” said Fazolli.