ABSTRACT
Italian bank impairments appear as the third highest, after Spain and Ireland. Starting from a solid balance sheet position, the Italian banking system has faced the global financial crisis, the instability of the sovereign market. Bail-ins might deepen the crisis, multiply losses, increase the costs involved and perhaps expand the haircuts to customers' deposits. Problems of contagion may arise if banks hold bail-in securities of other banks. It has been stressed that creditors facing greater risk will either demand a higher return or place funds with banks in the form of deposits in order to be immune from, or less exposed to, bail-ins. According to the Financial Times, issuance of subordinated debt, which suffers losses before senior debt in a capital's hierarchy, had risen by 80 per cent year on year thus far in 2014. The issues related to resolution planning and structural banking reform are being discussed separately at a policy level.
