Savings Banks and Foundations: Leaders in Development

Written by  Antonio Fazio
The Governor of the Bank of Italy's speech on the occasion of the 160th anniversary of the Cassa di Risparmio.
The greatest wealth of this region, of this city, lies in its enormous cultural and artistic inheritance and its noble civil traditions. These values are the cornerstone of an ordered economic life and of the participation in it of all the citizens. Ferrara and its outlying districts are characterized by the importance of the primary sector, the number of jobs in agriculture being more than double the average in Emilia-Romagna.

One peculiar element of the city's economic life is its capacity to attract a growing volume of foreign investments and there is a widespread presence of multinational businesses. The influx of capital is favoured by low levels of industrialization, the ample availability of highly skilled labour and a public administration that has cut down radically on the "red tape" required before new production enterprises can be launched.

Although it is picking up, the economy of Ferrara turned in results lower than the regional average last year. The unemployment rate is down to 9% and a further reduction is foreseen for the end of this year. The number of new jobs registered in 1997 is up by 7%. Production has benefited from the city's inclusion among those communes admitted to the Obiettivo 2 development plan, promoted by the European Union.
The economy of the Emilia Romagna region as a whole has progressed well, after the cyclical slowdown of 1996. Investments have picked up, but still seem inadequate in relation to growth potential and production. The region's banks have increased their share of the loans and deposits markets compared to banks from outside the region.

The returns of the main banks instead reveal a slight downturn with respect to turnover: the rise in income from services was not sufficient to compensate for the reduction in interest margins connected with the growth of competition.

The Cassa di Risparmio di Ferrara is a vital part of the economic fabric of the region. It became a public limited company on January 1st, 1992. The transformation represented the occasion to open the registered stock to the private sector: the Fondazione is the majority shareholder, with a stake of 76.9 per cent. The Cassa's awareness of the need for local credit persuaded it to incorporate the Banca di Credito Agrario di Ferrara in 1994.
In Italy and Europe, the competitive capacity of banks and banking systems will depend above all on the efficacy of cost cutting operations, staff costs in particular, and on the provision of products whose quality and price are suited to the new exigencies of business and families. Small businesses are a factor that allows our economic system to be competitive. Their strength also derives from the fact that, thanks to flexibility, workers have an effective stake in their companies.

Small businesses are characterized by high profitability, but on the other hand are more heavily indebted, mainly towards banks, than bigger companies. Nearness and long standing working relationships offer local banks informational advantages; these should be turned to account by directing the small business sector towards forms of indebtedness more suited to facing the risks and difficulties deriving from international competition and the accentuation of economic cycles.

There is a selection process underway within the banking system whereby inefficient companies are penalized to the advantage of dynamic operators better able to satisfy the needs of the clientele. "Smaller" but well run banks with sound roots in local society and industrial centres still have opportunities to make full use of the advantages at their disposition, as long as they can wed smaller size to an improvement in the quality and cost of services. A satisfying capital return is the prerequisite for the continued success of a local approach in a competitive context in continuous transformation.

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