Of Italy, Banks and Cats
(October 15, 2013)
The mournful atmosphere of the Italian banks is quietly registering a new alarming perspective: the utter vacuum one meets when entering any bank branch in any part of the country. Tellers idly check their balance, employees sneak out for a smoke or dash to the nearest supermarket to purchase their evening dinner. Managers stare into emptiness or stroll nervously around the place. No customers in sight: nobody brings any money in, nobody places stock exchange orders; nobody even drops in to change money since no transaction can be performed any more in cash.
For the past twenty years Italian banks have been ferociously fighting to get new offices, to place an agency almost in every block. The result is dreariness in the urban landscape: nothing can be more annoying than a bank window, with those smiling faces of highly improbable customers being awarded extremely convenient loans by attractive operatives impeccably dressed in black. Only pharmacies can be less attractive than banks in showing their goods. There are far too many bank premises for existing customers, alas.
Money is running low, very low, or not running at all. Euros doled out reluctantly by the Frankfurt gnomes to Italian banks vanish immediately in the vaults of the same, ready to be used when sooner or later (with sooner more recommendable) financial operators will be called to officially write off the odd 80% of their unredeemable loans. Everyone in the trade knows the unsavory truth. Even repossession is low: banks try avoiding the costly procedures to repossess houses they financed at full market prices (once upon a time banks would lend only little more than half of registry values, much lower than market prices) and just freeze debts. Unluckily enough, the only fresh, unaccounted-for money flowing happily in comes from the thawing of deposits of dirty money finding their way to legality. This, plus tax evasion, prevents the system from collapsing.
Opening too many branch offices was one of the most stupid of all possible follies. Even twenty years ago, only the blind management of Italian banks could ignore the writing on the wall: banking on line was to be the thing, and indeed it is today. No need any more for customers to stand in line or to find parking spaces in downtown areas. And more costs for the banks. But these kept cropping up like weeds all the same. The result was and is what we see: an enormous amount of office space - costly, useless, dramatically downsized in value. When banks will try getting rid of it they will discover (they are always the last to discover reality) that those spaces are suitable only for shops, and will equally discover (same as above) that all around them there is derelict commercial space to be rented at will, as demand for shop space in Italy plunged with the sharp contraction in consumer spending. If one adds the cost of reconverting a bank into a shop (including the removal of armored doors, electronic gear, partitions, heavy safes etc.), the dream of financial improvement turns, unhappily, into a nightmare. In their utter dumbness, possibly to exploit the abundance of employees, banks are extending banking hours to supermarket hours, hoping to attract at twilight some tycoon bringing cash in, protected by the failing light. But again, nothing stirs.
Banking by no means requires exceptional intelligence, the only requirement being just a crumb of foresight. The banks were a bit over-curious about new profit opportunities, and curiosity killed the cat. But unlike the other old saying, there’s no way that this cat is coming back.