“In
view of the planned privatisation, besides using the usual rigorous evaluation
criteria, the Board of Directors approved some extra measures aimed at
improving the quality of the assets and at considerably strengthening the
protection measures against risks due to credits, securities and holdings,
to provide the Bank's financial structure with the excellence criteria
the market expects.
Within the application scheme
of the budget criteria approved by the Board, the report includes value
adjustments on tangible and intangible assets equal to 257 billion lira,
provisions for risks and charges equal to 772 billion lira, value adjustments
on credits and provisions for securities and liabilities equal to 1,851
billion lira, value adjustments on long-term investments equal to 156 billion
lira and transfers to bad and doubtful debt funds amounting to 1,335 billion
lira... The shareholders' meeting will be asked to approve the covering
of the losses by using net worth provisions” (we put the bold type). These
are some of the most relevant parts of the press release issued by BNL
on March 30, 1998.
Thus, if words and figures
still have contents despite the “usual rigorous evaluation criteria” pertaining
the previous accounting periods, the bank thought it necessary to make
adjustments and provisions amounting to 4,371 billion lira (equal to 4,866
billion lira as consolidated debt)! It is a paradox: no one finds fault
with this! No newspaper tried to examine carefully the analysis and/or
criticised the management of the accounts which led to thousands of billions
of losses whose recovery is so uncertain that it was suggested to cover
them with provisions. This is one of those typical cases where reality
overcomes fantasy! A public bank's risk positions amount to more than 4,800
billion lira and Davide Croff - BNL's Managing Director - claims that “it
was a necessary operation that the market understands”.
It seems that this “market”
is satisfied with very little if it “understands” appropriations amounting
to hundreds, thousands of billions and neglects the fact that no details
are given about it. The figure for “tangible and intangible assets” is
257 billion lira (328 billion lira for the consolidated debt).But what
assets? Due to what events, following what controls? Silence! Complete
silence. The figure is this because the Board of Directors decided it as
such. Poor he who wants to know the elements, the facts, the situations
that led the Board to “evaluate”.
If the “value adjustments
on credits and provisions for securities and liabilities” amount to 1,852
billion lira (with a consolidated debt of 2,096 billion lira) and if the
“transfers to bad and doubtful debt funds” is 1,335 billion lira (1,513
for the consolidated debt), if together they amount to 3,186 billion lira
(with a consolidated debt of 3,609 billion lira), the Board cannot and
must not give details apart from the usual and trivial ritual sentences.
This is the routine procedure.
The “confidential nature”,
the “bank secret”, the “privacy” of the debtors and so on are the barricades
behind which the Board of Directors defends wrong strategic decisions,
credits given with guilty superficiality, mistakes in the controls and
in the evaluations.
These thousands of billions
that destroy as many thousands of billions of provisions have neither people
responsible for them nor responsibilities: they are just numbers.
Such anonymity, however,
is being very expensive for everybody because BNL belongs to the Italian
state and, so, to every citizen. Ultimately, BNL's losses are some sort
of tax that gets paid whose only consequence is a depauperation without
security. A “spring measure” which was decided by BNL's Board and that
the Treasury will approve. An additional measure to the one that Ciampi
and his staff are working out that, however, will need the two Houses'
favourable vote in order to be approved.
When Gemina discovered that
its losses were equal to less than 1,000 billion lira - mainly due to the
fact that the RCS' book store had not been devalued and to a reckless financing
to Fochi -a real and endless mess broke out. The press mobilised and talked
of a “black hole” in Gemina's accounts. The minor shareholders' associations
rose up. The Magistrature rightfully began to carry out some inquiries.
President Giampiero Pesenti is (if we're right) still being investigated.
There is even an inquiry currently being carried out for unfair balance
sheet against its past Directors due to the 3,000 billion lira “clean-up”
in Banco di Napoli's accounts.
An arbitration is also currently
being carried out with Auditing Company Price Waterhouse held to be liable
for damages. Then BNL needs a more than 4,800 billion lira “clean-up” and
everybody finds it logical, normal and even rightful. It would be a very
positive thing if the Magistrature sifted BNL's accounts. Only the Magistrature,
in fact, can today get the addenda of those 4,800 billion lira.
It can control when they
come out and their behaviour over time. It can control the single losses,
the single positions even when they are related to those “usual rigorous
evaluation criteria” that mark the Board of Directors, are supported by
Board of Auditors and certified by Auditing Companies. Should the Magistrature's
controls find that everything is right, it would be even better. For everybody.
For the Directors, for the Auditors, for the shareholders, for the Italians.
A huge public bank would be given the clean-hand as well as the regularly
kept accounts seals. The hope is that it is like this.
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Italian
Mensile di scienza medica e attualita`
