Forza private credit!

By Nicholas Smith, Director, The Alternative Credit Council

Published: 04 December 2019

The Alternative Credit Council’s (ACC) Nick Smith shares his thoughts on the growth of private credit in Italy.

My final stop on the ACC’s 2019 tour of key European markets saw me travel to Milan. I was delighted to chair a roundtable on the Italian private credit market and broader challenges faced by SMEs seeking finance. Among the attendees, I was pleased to welcome several European asset managers lending in Italy, local non-bank lenders, and policymakers such as the Central Bank of Italy and Consob. We were also joined by Assolombarda, an association representing local businesses in the region, which ensured the borrower perspective was prominent throughout.

Our conversation on the subject of lending in Italy brought to the forefront the sense that the local funding ecosystem in Italy has not developed in the same manner as other EU jurisdictions, despite the relative attractiveness of Italian businesses to non-bank lenders. Here, participants noted that the cooperation between banks and non-bank lenders that regularly takes place in many other European jurisdictions is less common in Italy. While such a position is understandable from a lender perspective, all parties noted that this was sub-optimal from a policy perspective as it reduced the ability of borrowers to obtain the best possible type of finance to invest in their business.

Despite these headwinds, being able to present real issues – and potential solutions – to policymakers in the room is an extremely effective tool for driving targeted reforms. For instance, proposals to simplify an overly complex Italian loan fund regime and tackle the inconsistent treatment of different lending instruments were presented as a way of improving requirements for non-bank lenders and borrowers alike. Overall, I was heartened by the high level of engagement from all stakeholders with a view to encouraging better outcomes for borrowers. Following on from the roundtable, the ACC will be taking these useful suggestions forward with Italian policymakers.

I would like to extend my thanks to our members and attendees for making this such an interesting and worthwhile discussion. I’d also like to thank to Allen & Overy for their generous support of this roundtable series throughout the year. While Milan concludes our 2019 series of private credit roundtables, I expect to continue this programme of engagement in 2020.

You can read more about our previous roundtables below: