So there’s a local exposure to an economy that wasn’t growing even before the crisis. The financial sector entered the crisis already weak, with low profitability and high costs. It withstood the 2009 crisis, but when the sovereign debt crisis hit in mid-2011, and interest rates on government debt went to 7%, the sector’s large portfolios of Italian sovereign securities depreciated rapidly.
At that point, as was to be expected, banks retrenched, tightening credit conditions for their customers. Financial conditions became very harsh for the real economy. It took a long time to improve. Even one year ago, rates were very high for an economy that had not been growing for years and was expected to stagnate in the future.