In Italy, as in other countries, the quality of bank loans deteriorates during recession. In 2009 the loan losses of our five largest banking groups absorbed almost 70 per cent of their operating results; their profits fell by over a fifth.
The trend, though moderating in early 2010, has continued and is affecting smaller lenders too, who were less badly hit in the early stages of the crisis. With the onset of the Greek crisis, acute liquidity strains in the interbank market have returned after subsiding last year. Transactions are mostly very short term.