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Banks, branches disappear and the gap between North and South increases: the report
The bank branches in the South and the businesses discount a significantly higher cost of access to finance than in the North: it is this part of the photograph taken by the Manageritalia Tertiary Observatory that attempts to outline a picture of the Italian banking system which sees a clear generalized decrease in the number of branches in the area and worst condition of access to corporate creditespecially in the South.
In the course of 2021, one was registered strong reduction in the number of bank branches active in Italy, from 23,481 at the end of 2020 to 21,650 at the end of 2021 (1,831 branches closed in just one year).
There decrease affected all Italian regions and there are 4,902 municipalities in the Peninsula that do not even have a bank branch within their borders. In the South, where the physical presence of institutes in the area was already very low, there is a lower per capita presence of branches which are concentrated only in large centers.
In the’Southern Italy it went from 30 branches per 100,000 inhabitants in 2015 to just 23 branches in 2021. In the same period in Italy the branches went from 48 per 100,000 inhabitants in 2015 to 35 in 2021, with a higher density in the North East where in last year there are still 49 active branches per 100,000 inhabitants (but they were 69 in 2015).
The province with the highest number of branches in relation to the population is Trentowith 69 branches per 100,000 inhabitants, Trentino is the first region of Italy (66 branches), the last province is Caserta with just 15 branches per 100,000 inhabitants, the penultimate Reggio Calabria which has just 16, while the last region of Italy is Calabria, which with 340 branches has just 18 for every 100,000 residents. institutes in the different territories.
First of all, the advent of Internet and home banking pushed credit institutions to close branches and move a large part of the services offered online, just think that between 2004 and 2020 the share of individuals using online banking services in Italy increased from less than 8% to 40% The Italian banks, then, have defined the territorial presence of the branches according to the economic activity of the companies in the territory and not according to the greater or lesser population.
Thus the North East of the country is the area with the highest density of branches in relation to the population, also thanks to the large market share that BCC and Casse Rurali – traditionally very present in the territory – cover in these areas. In the South, on the other hand, credit institutions keep half of their branches open in relation to the population compared to the North, also due to the lower presence of institutions and the medium-large size of banking operators with less differentiation of the offer. The decrease in the number of branches in the individual territories was also much faster in the South, which was the first to suffer drastic cuts.
If we then analyze the widespread diffusion of branches throughout the territory, the the gap appears even more marked. A visible disparity clearly emerges between the regions belonging to two groups of macro-areas: on the one hand the North-East and the Center, whose regions are mostly characterized by a coverage of the territory exceeding 80%, with peaks of over 90% in Emilia Romagna, Tuscany and Trentino-Alto Adige.
On the other hand, the Southern regions and Islands show a very varied coverage but, in general, lower, with an average of 50% of municipalities covered, between the peak of Puglia at 80% and Molise, where the 27 branches present manage to cover just 20% of the municipalities while in Calabria, the penultimate region for territorial coverage, only 127 municipalities (31%) have at least one bank branch while 277 do not even have one.
The exception in this case is the Piedmont, fourth to last region of Italy, in which only 40% of municipalities have at least one branch, less than Abruzzo and the Italian average which is 58%. Even in the field of business credit, the gap between the territories is confirmed, to the benefit of companies in the North.
The financial conditions that banks grant depend on corporate ratings and consequently generally penalize the South and the Islands, where average liquidity financing costs are more than 2% higher than in the North and less credit availability in relation to employment. The cost of loans for liquidity needs (TAE) in the northern and central regions is less than 3.5% of the financing, while in the southern regions the cost of credit reaches up to 7%.
In 2021 the average difference between the rates requested in the North-East and in the South reached over 2 percentage points, with rates below 3% in Veneto and Trentino and above 4% in Campania and Basilicata, close to 7% in Calabria, which boasts the sad record of the most expensive region in Italy for cost of bank loans to businesses. Various factors contribute to creating this gap in the cost of credit.
On the one hand, elements that contribute to creating a different perception of entrepreneurial risk by institutions, such as company size, the presence or absence of developed entrepreneurial ecosystems or the sector to which the companies belong (and the relative destination of investments and liquidity ).
On the other hand, competition in the credit market at the local level, with the possibility of exercising greater market power by those (few) Banks that operate in areas that are already poorly served. On the other hand, the territorial spreads on loans connected with investment needs remain more contained.
In this case to register a lower average cost of credit I am Lazio and Piedmont, probably thanks to large loans granted to large companies based in the capitals of these two regions. Even in this case, however, it is the firms in the North-East that enjoy lower average rates than in the other macro-regions, while the southern regions and the islands are lagging behind.
The president of Manageritalia Mario Mantovani he commented on the data of the Observatory as follows: “The bank credit dresses a essential function in the financing of companies, especially at the beginning of their life cycle. A reduced number of branches and the scarce presence of the institutions on the territory generate difficulties in accessing credit for businesses and fewer chances of creating a strong and stable trust relationship between banks and entrepreneurs ”.
“The cost of credit in the South, too, continued the president Mantovani, is a concrete obstacle to economic growth, right where it is needed most. In the South the banks they raise rates because corporate ratings are low, but businesses cope too high costs for bank loans and therefore have more difficulty investing. A vicious circle that speaks volumes about difficulty of doing business to the south”.
