For Italian banks classified as ‘significant’ for supervisory purposes, the share was 11.2 per cent, almost 4 percentage points higher than the average for the corresponding European banks. A correct classification of loans and the consequent adjustment of loan loss provisions are essential as they preserve the transparency of balance sheets, thus avoiding any sudden increases in write-downs if defaults were to increase.
However, there are still considerable differences in this respect between both significant and less significant banks.