Nicola Bilotta talks to Professor Giulio Sapelli about the Italian banking system.
According to Edward W. Said, an intellectual is an exile, ostracized by definition. An intellectual needs to be free to tell the truth. She or he does not defend any personal power and is not interested in following mainstream ideology. Professor Giulio Sapelli is indeed an intellectual. He has never been afraid to express controversial positions going against orthodox ideas. He is a polyhedral thinker, integrating several disciplines including economics, history, and philosophy in his thought.
Professor Giulio Sapelli has had an outstanding academic career. He is currently Professor of Economic History at Università degli Studi di Milano and he has been a fellow and visiting professor at several international universities. For five years, he was Director of Ecole des Hautes Etudes en Sciences Sociales in Paris. Sapelli has also had an excellent non-academic career. Among numerous experiences, we can note that between 1996 and 2002, he was a member of Eni’s Board of Directors and in 2000-2001 he was President of Fondazione Monte de Paschi. He has written more than 400 publications.
Sapelli has extensively written on the international financial market and its degeneration. His studies have focused on the role of cooperative banks in financial capitalism. Nicola Bilotta had a discussion with Giulio Sapelli about the Italian banking system and its structural weaknesses. As Sapelli said: “Italian capitalism is a capitalism without capital.” This statement is the first step to understanding the Italian banking system’s development.
The Italian banking system has three main peculiar features. (i) Italy has one of the highest rates of private savings in the world. (ii) Italy has many more small- and mid-size banks compared to other European countries. (iii) There is a close relationship between banks and enterprises; the Italian stock market is not well developed, so companies raise funds from bank loans. In light of these features how can we explain the issues of the Italian banking system?
The origins of the weakness of Italian banking trace back to the 1980’s. When Carlo Azeglio Ciampi was Governor of Banca d’Italia (1979-1993), the Italian central bank encouraged banks to both compete amongst themselves and consolidate. These two processes are impossible to implement simultaneously. Thus, banks preferred to consolidate, but their mergers were not well supervised either by Banca d’Italia or the banks’ management.
The Italian banking system changed its structure too quickly. It promoted processes of privatization and consolidation while simultaneously abolishing the legal separation between commercial banks and investment banks. The reform allowed banks to increase their functionalities; they were not only lenders to enterprises, but traders of derivatives and financial products. From a system based on three big public banks, Italy became a system in which there were many banks working as universal banks.