With the 2020 Recovery Decree to relaunch the Italian economy, a new path opened for Italian banks, granting them the possibility to issue Commercial Papers and therefore short-term liquidity instruments.

Previously a tool reserved for businesses, but in recent months, with the waning of the ultra-expansive monetary policy of the ECB and the liquidity injected into the market by the central bank, this new opportunity has attracted more and more credit institutions

We asked Alessandro Stangalini, Head of Treasury at the Credem Group, to contextualises the recent decision of the bank to issue around 200 million euros of Italian Commercial Papers within the framework of a dedicated one-billion-euro issuance program launched September 2023.

Unlocking new opportunities for Credem 

"In the current context of normalisation of monetary policy, we have seized the advantages of this renewed instrument provided by recent legislation for the Italian market. The decision aligns with the group's desire to diversify funding strategies and integrates this new short-term liquidity channel with all other institute's sourcing instruments. It represents an important and supplementary alternative to interbank deposits, thus allowing for a more comprehensive treasury management."

"Having an additional short-term liquidity channel, up to 12 months, will be a significant resource in this context of reduced liquidity coming from the ECB. Several factors favored the operation, such as the qualification of our financial bills under the STEP LABEL, a European standard that promotes market homogeneity across the continent and represents a guarantee for national and international investors. We were pleased to see interest in this issuance from common investors in this market, namely fund managers and money fund managers, but we also discovered some interest from large corporate investors. Treasury banks have also shown interest in this instrument. The support of our dealers and Euronext was fundamental. They connected us with international investors, expanding our network of potential market counterparts for our issuances. Besides France, traditionally strong in this type of issuance, we were pleased to find interest in Spain and Portugal. We also benefited from the elimination of the sponsor figure, which lightened the burdens of these issuances, aimed at qualified investors. We gradually verified the possibility of using this funding channel with greater agility, integrating the initial predominantly 3-month maturities with others also at 7 and 8 months. We will definitely integrate this new opportunity with the range of options the bank has available for its financing. With these short-term instruments, we can optimize treasury management with a broader and more granular diversification, also in terms of maturities."

Strategies for Expanding the Use of Financial Bills in the Italian Market

"This instrument, widely used abroad, is experiencing a new life in Italy today. The rules and the context have changed, and now financial bills and short-term liquidity instruments are in a position to develop in parallel with the normalization of monetary policy. It's an opportunity, but communication is probably very important at this stage: informing the financial community about this path that can facilitate the transition to the new phase of financial markets. Industry associations and actors in the monetary, banking, and financial markets that could benefit from this new possibility should be involved."

"We will calibrate this instrument to our needs; we already have an outstanding of around 200 million euros, but we don't need to fully utilize the one-billion-euro allocation of the program.

It will be important to integrate this financing channel with all our other funding and treasury strategies to derive maximum benefit.

It's a somewhat different approach from other instruments. In any case, we will nurture the network we have already begun to build and contacts with even foreign investors, such as those from Spain, who have shown interest in this operation. We will maintain contacts with dealers and partnerships. In the second half, we already have plans for meetings with market operators, and we intend to structure this innovative instrument that we have just applied. The use of the opportunity of financial bills issuance, moreover, is another confirmation of Credem's attentive and professional industrial management, which has always kept its focus on innovation."