Giuseppe Castagna – Amministratore Delegato Banco BPM

Yes, thank you very much for the invitation and also for the question. But let's say for us it has always been quite clear that the role for the development of a country, let's say the economic infrastructure of a country, is based on the ability of the banking system to help businesses grow. Obviously, this role becomes even more emblematic, even more evident in a time of crisis. It was in previous years, during the previous crises we faced, and it was even more so, as you rightly said earlier, with the support we gave to businesses, large, medium, small, and very small. Let's remember that we made an infinite number of guaranteed loans under 30,000 euros. So objectively, banks were there, they responded quickly, and they created perhaps that bond, that relationship of trust with the customer, and even more intensely, because when there is an evident need, especially for liquidity, because let's remember that the real problem was to provide liquidity to the system. Today it seems to me that the mood, let's say, of collaboration and partnership between banks and businesses is much more evident than before.

The recovery is there, I must say it has been there. After the first months of bewilderment of the pandemic in 2020, already from the summer of 2020 there was an evident recovery in manufacturing, which objectively then started 2021 at full speed, and we are having exciting growth, but also revenues and the increase in exports, which are at levels never reached before. So objectively, from this year, from the summer of this year, services are also recovering, so those that had fallen behind, the world of hospitality, restaurants, retail, which objectively had been forced to slow down because often closed, instead from the summer they started to pick up. So at this moment there is an objectively particularly favorable situation, except for what we know about the increase in raw material prices, the bottleneck in the supply chain for some important materials, which however are not slowing down production capacity but are clearly causing inflation to rise a bit. We know that the increase in prices is an issue we will have to face, this is certainly one of the themes. So anticipating what could be future problems, even if I believe that this increase in prices and raw materials, including gas, which seems something inevitable at this moment for the recovery of investments, is actually the result of a particular conjuncture that I think, once winter is over, will resume having much more moderate prices.

The other fundamental theme, and here we come to another topic just mentioned, is Italy's ability to deploy the PNRR, which requires two fundamental things: first, to make reforms, and here it seems to me that the good will is there, but it seems that the good will is mounting, but the steps, as Cotroneo said earlier, the parliamentary steps are necessary, naturally, they are more complicated than they seem. For example, on the issue of competition, which is a central theme where our country has made many steps forward, but the resistance is strong, it is understandable. Because, as Cotroneo also said earlier, on the theme of sustainability, for example, we are facing a transformation that concerns businesses, training systems, if one thinks of universities today compared to what they were ten years ago, it concerns banks, we are all in the condition of having to ferry or transition ourselves and the structures in which we are inserted towards a world that we know only up to a certain point. Because you referred to gas, that theme concerns some specific emergencies, but perhaps it is part of the great energy transition. So the multiplication of sources is a very positive phase, but it is the fear or the courage to face them. Indeed, moreover, with this increase in gas, we are seeing that those who have already moved to alternative sources are among the most favored, because clearly they have had a much faster reaction capacity, and also producers, faced with the increase, have had an unexpected increase in prices in their multi-year budgets. But the discourse of the ecological, environmental, energy transition is clearly now a fact. On the other hand, the majority of the resources made available are destined for these sectors.

Banks, and it's true what Cotroneo says, have been dealing with the issue for a year and a half, have made very important steps forward, because we are in some way also subject to very strong supervision by the European Central Bank, which not only imposes on us to be compliant with the updates from the point of view of the banks' own consumption, but also to do so on customers, and therefore to subject customers to an ESG rating that determines their bankability. Clearly the rating and therefore the pricing of the products we will do. So more and more, and already now we have started, our customers, in addition to having a credit rating, will have a credit rating integrated with an ESG rating. So the role has been somewhat delegated to banks, through clearly this sort of stick and carrot, to finance businesses and also the ability to push businesses to be increasingly compliant and attentive to these issues, which objectively until six, twelve months ago were very attenuated in the perception of Italian SMEs.

The resources of the PNRR, I remember correctly because it's something we worked on, on December 13th a small book will be published by Corriere della Sera that aims to help understand what is inside these six missions. One of these is precisely sustainability. But I think the interpretation we have all given is not that of not financing those who today use traditional or now obsolete energies, but rather to tell those we finance that if they do not undertake a path of transition themselves, it will no longer be easy, it will no longer be possible to finance them. Today we have only 2% of our assets in sectors that are currently unfinanceable, and on which we have already declared that unless there is a strong commitment to change, we will phase out, so we will go to the maturity of the loans and not renew them. But that is only 2% of the bank's assets, while we have said that 80% of new financing will be destined to those companies that, even in sectors that clearly must change, must make this transition, and are starting to have additional costs and investments to cross this fundamental passage more quickly. So in my opinion, it is not a matter of not financing them anymore, but of financing those who understand that this is the future, and it is a political and economic choice that is now indispensable.

Then on the other hand, there is also savings. Enrico Marro mentioned at the beginning that that too is an engine, because depending on where it is directed, this acceleration, instead of calling it transition, he calls it environmental acceleration, will be possible. And banks have a responsibility and also an interest. We all have a responsibility, because not all savings end up in banks, a lot of savings end up with asset managers, and a lot of savings also end up in countries outside the EU, and therefore it is difficult for them to be reinvested in our country. So it is a somewhat broader theme. However, the point is that many asset managers, with regard to ESG compliance, have been anticipators compared to the attention that banks have. So from that point of view, I think it is a path that does not stop and goes forward very directly. The problem is how much of these funds will return to our country, and therefore how much private savings can be put in support of all the Italian and European public funds that will arrive with the PNRR.

And let's remember another thing, I insist on saying this: the use of these public funds must be for the most part reserved for lasting investments over time that make our country grow, because let's remember that we went from 120% to 154% debt-to-GDP. So objectively, we have to achieve this reduction in public debt through support for investments that make GDP grow a lot in the coming years. If we only incentivize spending, consumption, and bonuses, we will have growth for the next two years, but then a decline in the years to come. So it is very important that all this is allocated quickly and clearly, because also here banks can do a lot, but today we still do not know how these funds will arrive, whether we have to finance the public administration or private individuals, like the ERA that Cotroneo mentioned earlier, could be financed by taking advantage of the fact that it will be a facilitation for that company to come where there is a PNRR project. But today we still know little.