IN ITALY: BIGGEST MORAL HAZARD FOR 5 MAJOR BANKS

IN ITALY: MORAL HAZARD FOR 5 MAJOR BANKS

by Marco Saba

Here below I enclose the conclusion of a recent (today) evaluation of risk of some 5 main Italian banks taking into account the brand new AMR index elaborated by my econ-department (AMR = Actual Monetary Rent). You can see the relation between capital of the bank and hidden exposure to AMR debt (a debt to the Italian State):

MORAL HAZARD
Rapporto tra capitale sociale e indebitamento RME di 5 banche (from best to worse):

MPS 1: 474
UNICREDIT 1:475
BANCO POPOLARE 1: 478
INTESA 1:1093
CARIGE 1:7209

You can see that the worst is CARIGE exposed for 7,209 times her company capital. This is a sort of super-index revealing the fractional credit created.