NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business

Italy debt fears: Nervous Italians start to funnel money across the border

By Ambrose Evans-Pritchard
Daily Telegraph UK·
16 Oct, 2018 05:20 AM6 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

A rising number of Italian families are putting put savings in Switzerland. Photo / Getty Images

A rising number of Italian families are putting put savings in Switzerland. Photo / Getty Images

Nervous Italians are starting to funnel money across the border into Switzerland, worried that an epic clash with the EU could set off a Greek-style banking crisis and a slide towards default.

"There is fear creeping in," said Massimo Gionso, head of family wealth managers CFO Sim in Milan.

"People are concerned that if we get into the same situation as Greece, they might find the banks are closed and they can take out only €50 ($88.11) a day from cash machines. They don't want to risk it," he told The Daily Telegraph.

Read more: Italy on brink of banking crisis as debt costs spiral

"These are families with savings of €200,000 or €300,000," he added.

Advertisement
Advertise with NZME.
Advertisement
Advertise with NZME.

"They want to set up accounts in Lugano or Chiasso across the border in Ticino where everybody speaks Italian. The big players have already got their money out."

Gionso said this capital flight has nothing to do with tax evasion. The authorities are notified and all transactions are above board. It is linked to fears of euro break-up as the insurgent Lega-Five Star government tears up the eurozone fiscal rule book.

"I think there has been a lot of media terrorism over this, both inside Italy and abroad," he said.

Advertisement
Advertise with NZME.

"There is not going to be a sovereign default in Italy or a run on the Italian banks. It is just absurd. But this is what people are worried about, and I am just doing my job."

Italians are worried that an epic clash with the EU could set off a Greek-style banking crisis. Photo / Getty Images
Italians are worried that an epic clash with the EU could set off a Greek-style banking crisis. Photo / Getty Images

The Swiss group Albacore Wealth Management told Italy's Il Sole it had received a wave of inquiries from Italians with €5 million to €10m in liquid capital. The super-rich are already a step ahead.

"The big fish have been organising the expatriation of their wealth for some time," it said.

Fabio Fois from Barclays said Italy's underlying fiscal profile is deteriorating at an alarming pace.

Discover more

Business

Finance CEOs pull out of Saudi event

16 Oct 01:27 AM
Business

Higher inflation lowers odds of rate cut

16 Oct 04:09 AM
Business

NZ dollar gains against greenback

16 Oct 04:23 AM
Business

NZ shares fall; Meridian drops

16 Oct 05:02 AM

"The risk of Italy sliding into an unstable debt spiral has increased," he said.

Fois said risk spreads on Italian 10-year bonds could rise "sharply higher", perhaps punching through the 400 basis points.

The trigger may be action by Moody's and Standard & Poor's later this month. Markets have already priced in one-notch cut in the rating but not a further negative watch as well, which would bring "junk" status into sharp focus.

Simon Derrick from BNY Mellon said the drama feels like the onset of eurozone crisis in 2011.

"This all has a very familiar pattern. Once the spreads blow up and reach 400, you reach a tipping point and the crisis takes hold," he said.

For now the spreads are hovering near the first big pain threshold of 300 points. This is already hurting banks, which hold €387 billion of state debt.

Advertisement
Advertise with NZME.

Read more: Will spiralling crisis end with Italy leaving the eurozone?

They face mark-to-market losses as yields rise. This erodes their capital buffers, forcing them to curtail lending. Or they might have to sell some of their bonds. Either action can quickly turn into a self-feeding "doom-loop" as the banks the sovereign state take each other down.

Intesa Sanpaulo said yesterday that it could withstand 400 points without having to raise capital.

Any sign that Italians might be pulling money from bank accounts is ominous. David Owen from Jefferies said Italian deposits held rock solid through the eurozone crisis.

"It was nothing like Greece where there was wholesale liquidation," he said. "So far we haven't seen any of that in the Italian data."

However, figures from the Bank of Italy are released with a delay.

Advertisement
Advertise with NZME.

Net capital outflows were a record €72b in the two months of May and June. That reflected moves by big investors, not deposit flight.

There was a recovery over the summer when finance minister Giovanni Tria held out an olive branch. He has since been shoved aside. The September data may be sobering.

Global funds have loosely assumed that the European Central Bank will shore up Italy if need be.

Luigi Di Maio, Leader of Five Star Movement. Photo / AP
Luigi Di Maio, Leader of Five Star Movement. Photo / AP

But the bank is legally prohibited from buying Italian bonds in any debt crisis, unless Rome applies for help from the eurozone bail-out fund (ESM).

This comes with draconian conditions and requires a vote in the German Bundestag.

"There is no chance at all that the current Italian government would accept it," said Lorenzo Codogno from LC Macro Advisers.

Advertisement
Advertise with NZME.

This changes the calculus for investors. Complicating the picture further, the ECB is winding down quantitative easing and will stop all purchases of EMU debt at the end of the year.

Mario Draghi, the ECB's chief, told Rome over the weekend that there would be no soft rescue and warned of trouble "if people start to put in question the euro".

"The clear message is that there is no ECB 'put'," said Derrick.

"In the end, I'm sure the ECB will come to the rescue because Italy is simply too big to fail. So in a way, the balance of power lies with Rome."

Hardliners in the Lega-Five Star alliance think the EU is bluffing over the budget and will give ground.

Lega economics spokesman Claudio Borghi told The Telegraph last week that the EU can expect "Armageddon" if it tries to force Italy to its knees.

Advertisement
Advertise with NZME.

"They will find that the crisis is not Greece squared, but Greece cubed," he said. "This would be a thousand times worse."

However, the Lega surge in the polls has peaked. Criticism is mounting within Italy. The EU has made no secret of their strategy of using "market discipline" - or "spread warfare" - to break resistance.

There is no sign yet that Rome is willing to back down.

Matteo Salvini, the Lega strongman, remained defiant yesterday. "We were elected to change things," he said.

"We don't feel bound by rules decreed by Brussels, which so many governments have ignored, starting with France, Germany, and Spain."

Jean-Claude Trichet, former President of the European Central Bank, said the stand-off must be handled with extreme care. Photo / AP
Jean-Claude Trichet, former President of the European Central Bank, said the stand-off must be handled with extreme care. Photo / AP

The government missed its EU deadline for submitting its budget plans, delaying the draft for another day after a coalition dispute over the terms of a tax amnesty.

Advertisement
Advertise with NZME.

Yet the contours are agreed. The planned deficit will be 2.4 per cent of GDP next year, a loosening of 0.8 per cent compared to a tightening of 0.6 per cent expected under the Stability Pact.

Barclays says it will in reality be at least 3 per cent. A global downturn would push it through 4 per cent in short order and trigger a debt sustainability crisis.

Brussels is in an invidious position. Italy is the first big test of the revamped rules. Failure to act will further erode the confidence of Germany and the Nordic states in the disciplinary structure of monetary union.

Yet a knife-fight with Salvini almost guarantees the very crisis that the EU most fears.

Jean-Claude Trichet, the ECB's president during the EMU crisis, told Corriere della Sera that this stand-off must be handled with extreme care, implicitly rebuking those in Brussels and Berlin who talk loosely of debt restructuring. "It would be a catastrophe," he said.

Save

    Share this article

Latest from Business

Premium
Media Insider

TV shake-up: Sky TV set to lose channels - viewers 'don't like repeats'

05 Jul 09:46 AM
Business|companies

Entrepreneur Bowen Pan on why he returned to NZ

Premium
Business|companies

Silicon Valley to NZ: Kiwi Facebook Marketplace inventor is back home to give back

05 Jul 12:00 AM

Audi offers a sporty spin on city driving with the A3 Sportback and S3 Sportback

sponsored
Advertisement
Advertise with NZME.

Latest from Business

Premium
TV shake-up: Sky TV set to lose channels - viewers 'don't like repeats'

TV shake-up: Sky TV set to lose channels - viewers 'don't like repeats'

05 Jul 09:46 AM

A major global deal is coming to an end for Sky. What does that mean for customers?

Entrepreneur Bowen Pan on why he returned to NZ

Entrepreneur Bowen Pan on why he returned to NZ

Premium
Silicon Valley to NZ: Kiwi Facebook Marketplace inventor is back home to give back

Silicon Valley to NZ: Kiwi Facebook Marketplace inventor is back home to give back

05 Jul 12:00 AM
Premium
Bruce Cotterill: Is our bloated bureaucracy hindering economic growth?

Bruce Cotterill: Is our bloated bureaucracy hindering economic growth?

04 Jul 11:00 PM
Gold demand soars amid global turmoil
sponsored

Gold demand soars amid global turmoil

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP