UBI Banca Group

The interbank market
and the liquidity situation
Quarterly changes in net interbank debt
Figures in thousands of euro
31.12.2011
A
30.9.2011
B
30.6.2011
C
31.3.2011
D
31.12.2011
E
Loans to banks 6,184,000 5,314,336 4,384,636 4,510,008 3,120,352
of which: loans to central banks 739,318 1,485,674 325,450 345,625 739,508
Due to banks 9,772,281 8,611,714 4,966,574 7,332,517 5,383,977
of which: due to central banks 6,001,500 4,000,333 - 1,255,064 2,219,152
Net interbank position -3,588,281 -3,297,378 -581,938 -2,822,509 -2,263,625
Figures in thousands of euro
31.12.2010
F
30.9.2010
G
30.6.2010
H
31.3.2010
I
31.12.2009
L
Loans to banks 3,120,352 3,427,795 3,290,637 2,996,834 3,278,264
of which: loans to central banks 739,508 295,430 375,415 282,815 641,788
Due to banks 5,383,977 7,126,257 9,252,062 4,612,141 5,324,434
of which: due to central banks 2,219,152 2,000,056 2,977,481 479,002 639,753
Net interbank debt -2,263,625 -3,698,462 -5,961,425 -1,615,307 -2,046,170
The deterioration of the Italian sovereign debt crisis has heightened the perception of risk attaching to
Italian banks – among the main holders of that debt – since the summer. This has caused on the one hand,
a progressive reduction in interbank transactions, with increasingly fewer foreign counterparties involved
and on the other it has made the longer maturity institutional markets (EMTNs and covered bonds) actually
inaccessible for Italian banks, which has also affected trading on monetary markets (euro commercial
paper and certificates of deposit) as a result.
These phenomena have had a particularly strong impact on the availability of funds, notwithstanding the
high proportion of retail funding which traditionally characterises Italian banks and represents a very
stable source of liquidity.
The consequence was an increase in recourse to funding from the Eurosystem (loans in euro to Italian
banks for monetary policy purposes), which rose progressively from €41 billion at the end of June to €105
billion in September, reaching almost €210 billion in December, to then stabilise at around €200 billion in
January and February 2012.
On its part, the governing council of the ECB has encouraged refinancing by adopting exceptional monetary
policy measures. It introduced three-year fixed rate operations with full allotment of bids. It has further
widened the range of eligible assets, by extending the criteria for the acceptability of loans and it has
reduced the compulsory reserve requirement from 2% to 1%. These measures were added to by an initiative
taken by the Italian government, which introduced government guarantees on the medium-term funding of
banks.
The liquidity injected into the banking system at a low cost has in fact significantly reduced pressures on
funding, thereby allowing banks to make operational decisions which do not compromise their continued
lending to the economy and also to invest in securities.
In this context described above, the UBI Banca Group has addressed its liquidity management
by introducing a number of lines of action:
• it has strengthened its liquidity reserves represented by assets eligible for refinancing
with the ECB. In this context the Parent also made use of the government measures by
issuing government backed bonds at the beginning of 2012: two issuances on 2 nd
January for a total nominal amount of €3 billion (€2 billion with a three-year maturity
and €1 billion with a five-year maturity), followed by a further €3 billion nominal on
27 th February (€2 billion, three-year and €1 billion, five-year);
• it participated in two refinancing operations with a three-year maturity (longer-term
refinancing operation – LTRO) to compensate for the absence of institutional funding
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