Italy Negotiating With Banks for Mortgage Relief in Virus Crisis

The Italian government is negotiating with banks to provide breaks from debt payments including mortgages, as individuals and businesses are hit by a nationwide lockdown to contain the coronavirus.

The country is also studying relief for temporary layoffs and additional fiscal measures to support the economy, Deputy Finance Minister Laura Castelli said in a radio interview. A new decree on economic measures will be announced soon, she said.

“If the government seeks to use banks as a vehicle to channel expansionary measures, banks should not be directly affected,” said Jacopo Ceccatelli, chief executive officer of Marzotto SIM SpA, a Milan-based broker-dealer. “Whatever the banks give to their customers should be covered by the government.”

Italy became the first country to impose nationwide controls to combat the spread of the coronavirus, with deaths edging toward 500. The government on Monday extended severe restrictions on travel and public activities to the whole country, just 48 hours after imposing a more limited ban in the region around Milan.

Last week, Italy announced 7.5 billion euros ($8.4 billion) to help contain the impact of the coronavirus outbreak on the economy. The extra spending will lead Italy to break its budget deficit commitments by 6.35 billion euros, or 0.35 of a percentage point of gross domestic product. Italy is already in talks with the European Commission to be granted the necessary flexibility.

Italian bank loans to private sector amounted to 1.41 trillion euros at the end of last year, according to data compiled by the Italian banking Association. Intesa Sanpaolo SpA, the biggest bank by branches had about 400 billion euros outstanding.

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