As we have documented, bad loans are recorded in banks’ balance sheets at values consistent with the recovery rates actually observed in the last ten years.
If they were sold at the very low prices offered by the few large specialist debt collection agencies active in the market today, which pursue very high returns, the amount of additional write-downs would be in the order of € billion. At the end of 2011 net bad loans held by Italy’s banks made up 2.9 per cent of total loans.