Milan - There is a new fear spreading through Italy's
industrial heartland near Milan -- a looming credit crunch for
businesses linked to a spike in pressure from the financial markets.
"If we don't get any more credit we'll have to cut jobs
or close the company," said Massimo Pelizza, financial director at
SO.CO.TEC, a family-owned firm that produces water, heating and air
conditioning systems.
The company, which employs 120 people, is doing well on the surface.
It estimates its turnover will rise this year to some
20 million euros ($27 million) from around four million euros in 2008.
But SO.CO.TEC has just been turned down for a 400,000-euro loan that it
needed to expand.
"We want to grow to create jobs," Pelizza said in his
office in Lentate sul Seveso, some 30 kilometres (20 miles) north of
Italy's commercial hub.
Research by the Bank of Italy and business daily Il
Sole 24 Ore showed that the percentage of employers experiencing
difficulties in obtaining credit rose last month to 28.6 percent from to
15.2 percent in June.
OMV Ventura -- a steel tube manufacturer that is also based near Milan and employs 45 people -- is in a similar bind.
"Since the start of the September, we have been seeing a
major change in the attitude of banks that want to reduce their risks,"
said managing director Nicola Vernaglione.
OMV Ventura obtained a 1.5-million-euro loan in June
for purchasing raw materials but Vernaglione said he had been told by
one bank that it would only provide a loan now by "dividing the risk"
with other banks.
Any new loan requests by businesses "will be very
difficult," he said, warning that the problem would hit hard at the end
of the year when banks review their credit lines.
"It's a bit like a snake biting its tail" since tightening of credit would worsen the economic situation even further, he added.
Experts say Italian businesses are getting hit by the
banks as a knock-on effect of the market jitters of recent months over
the country's strained public finances and efforts to stabilise them.
"Banks have increased their risk premiums since Italian
debt, to which they are very exposed, is considered more risky," said
Giuliano Noci, a professor at Milan Polytechnic University's MIP
business school.
"They therefore have higher refinancing costs which is causing a lack of liquidity," he added.
Underlining the gravity of the situation, the director
general of the Confindustria employers' federation, Gianpaolo Galli,
warned earlier this month that the "tsunami alarm" of a credit crunch
had sounded.
Giovanni Sabatini, director of the Association of
Italian Banks, said that if the costs of refinancing remain high, "this
will inevitably be reflected on the financing given to companies."
According to the latest figures, the number of loans
given to the private sector actually increased by 4.0 percent in August
from July but the figure marks a slowdown compared to preceding months.
Businessmen blame the economic situation but also a
government whose shaky credibility on international markets has
precipitated the sharp rise in the risk premium for Italy.
"I don't know a single businessman who doesn't have an extremely negative view" on the government, Vernaglione said.
The businessman said he had enough of "sitting down
with a client and talking about bunga bunga" -- a reference to the
multitude of sex scandals involving Prime Minister Silvio Berlusconi.