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MILAN, Oct 31 (Reuters) - Rising bond yields and higher risk perception of Italy are helping BFF Banking Group’s business, the lender’s chief executive, Massimiliano Belingheri, told Reuters.
Italy’s borrowing costs have been rising under a new anti-austerity coalition government that plans to boost deficit spending to revive the economy.
The risk premium Italy pays over safer German Bunds has climbed to a 5-1/2 year high due to Rome’s plans to raise next year’s deficit to 2.4 percent of domestic output under a draft budget which has been rejected by the European Commission and has raised concerns of a credit crunch.
BFF Banking Group, also known as Farmafactoring, offers factoring services for credits given by the public administration to its suppliers of services and goods.
Factoring companies collect credits held by businesses, paying them any remaining amount due minus a fee. The higher the uncertainty on the public administration’s ability to pay bills, the higher the incentive for businesses to have their credits factored.
“Fragile markets are good for us: abundant liquidity over the past few years has made our business less attractive, while now companies need to assess if it makes sense to hold credits with a potentially longer reimbursement time,” Belingheri said.
In the past year the average reimbursement time by Italy’s public administration offices has risen by 10 percent, BFF estimates.
“The higher risk perception is good,” Belingheri added.
Belingheri said he expects a “good” fourth quarter for the group, saying volumes and earnings would keep growing this year and beyond.
The lender, which obtained a full banking license in 2013, posted a net profit of 95.5 million euros ($108 million) in 2017, up from 72.1 million the previous year.
BFF Banking Group, which also operates in several Euroepan countries outside Italy, recently asked Poland’s authorities to open a branch in the country to collect long-term deposits in a bid to expand its funding capabilities, Belingheri added. ($1 = 0.8823 euros) ($1 = 0.8826 euros) (Reporting by Massimo Gaia and Luca Trogni, writing by Giulio Piovaccari; Editing by Emelia Sithole-Matarise)