of Municipalities Verona and Venice still struggling with Merrill Lynch
If you close all outstanding derivatives contracts, the government of North-East should pay 99 million euro. In so much is the market value of such financial products purchased by 39 local authorities of the three regions.
The government does not have the resources today to do this, and some of them - Verona, Padua and Venice - are hung on the causes or subpoenas that block extinction.
In Verona, in particular, the town hall, led by Flavio Tosi will demonstrate how to Merrill Lynch, the investment bank that in 2007 the city signed with a derivative of 256.8 million, has applied hidden fees.
But the more time passes, it becomes more costly to maintain and even settle derivatives.
Data (Bank of Italy) also say that the Veneto is being, in this sense, among the most disadvantaged regions of Italy, in the territory since the ratio of total debt of the institutions and the market value of products above the national average (1.38% compared with 1, 1%). Better go, things in Friuli-Venezia Giulia and Trentino-Alto Adige (free of these problems).
'Classics derivatives should be closed as soon diminish their market value following the drop in interest rates - say experts -. In addition, advisory services are: the management of these contracts is at the limit of amateurism "
The cost of derivatives accounts for 99 million
The cost to be incurred to close once and for all derivatives contracts, amounted to a total of 39 governments involved in the North-East, 99 million €. The figure corresponds to the market value at June 2010, according to figures from the Bank of Italy. The weight loss of derivatives - contracts often used to fund "spot" in favor of the administration in office, and transfer costs "out" when the government will be to others - seems to be higher than the Italian average, particularly the Veneto, as the ratio of government debt involved and the total market value of the products purchased is higher than the national average.
In Veneto at the end of 2009, government debt amounted to 6.484 billion. In June 2010, if local authorities had closed its derivatives were switched on in the past had to suffer a loss of 90 million. The relationship between these two values \u200b\u200b(90 million and 6.484 billion) is equal to 1, 38 per cent. When compared to the result of this relationship with the national average (1.1%) one gets a differential (1.38% - 1.1% = 0.28%) indicates that, being greater than the national average, as the derivatives in the Veneto are producing more damage than the national average.
From December 2005 to June 2010 has also changed the cost the possible closure of the transaction related to "derivatives": it increased from an initial 18 million to 90 million. However, the significant increase occurred in recent months (higher cost of 30 million by the end of 2009 to June 2010). Spreading the cost of the number of public bodies involved can obtain the average figure for an institution: in December 2005 was € 621mila while June had risen to 3,000,000. Another interesting fact is the evolution of this cost than the national average. In December 2005 in the Veneto was 621mila € 1.709 million against the national average, while June was 3,000,000 against 3,300,000 national average. Thus the situation in Veneto is much worse compared to the average Italian.
Given the high cost that requires a possible closure of a derivative, governments are far from being able to do so. But there's good news from two judgments of the Administrative Court. On 5 November, the Tar of Tuscany has made a ruling that seems to offer the public the opportunity to tear up contracts on derivatives if it is shown that in the contract were not clearly specified costs or onerous clauses. The Administrative Court has approved - with retroactive effect - the annulment in self-defense by the province of Pisa, the two swap agreements in 2007 with lenders Depfa Crediop and counterparties. The contract, in fact, would be borne - as noted by the external experts contacted the province of Pisa - from hidden costs for 1.4 million euro. The basis for the cancellation, the violation of the "principle of cost-effectiveness" established by the 2002 budget.
In recent days, even the civil court of Rimini has spoken in favor of a public body, renegotiated after three interest rate swap contracts, has even worsened its financial position. The court issued a ruling of invalidity of the contract.
Regarding Friuli-Venezia Giulia and Trentino-Alto Adige, the situation is much better than the Veneto. In Friuli-Venezia Giulia in late 2009, the government debt amounted to 2.840000000000. In June 2010 if the local government had closed its derivatives were switched on in the past had to suffer a loss of 9 million. The relationship between these two values \u200b\u200b(9 million 2.840000000000) is equal to 0.32% which is below the national average, which indicates that the derivatives are produced in the Friuli-Venezia Giulia less damage than the national average. From early 2010 to June, however, contrary to what happened in the Veneto, in this region there has been only a slight increase in the cost (8000000-9000000). As regards the average cost per institution in December 2005 was € 3.5 million while in June had dropped to 1 million (compared with 3.3 million average national).
In Trentino-Alto Adige in late 2009, government debt amounted to 1.169 billion. In June 2010 the local government no longer had any derivative contract on. Only case in Italy along with the Valle d'Aosta.
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