By Christopher Emsden
ROME--The lobby representing foreign banks operating in Italy
said Thursday that it is pressing the government to slash taxes,
red tape and legal uncertainty, saying its members will buy more of
the country's government debt and help the euro zone's
third-largest economy grow.
"You can't ask finance to do its job better with more taxes,"
AIBE, which represents Deutsche Bank AG, Commerzbank AG, BNP
Paribas SA and Citigroup Inc. among others, wrote in an open letter
signed by its president Guido Rosa.
AIBE said it had addressed the letter, sent on Feb. 7, to "Prime
Minister Gianni Letta." However, Italy's prime minister at the time
was Enrico Letta, a senior official in the center-left Democratic
Party. Gianni Letta is his uncle and a top adviser to conservative
leader Silvio Berlusconi.
Mr. Rossa said AIBE's members had "guaranteed coverage of our
public debt even in the most difficult moments."
Italy's sovereign borrowing costs shot up in summer 2011 after
large German banks revealed they had sold large amounts of Buoni
del Tesoro Poliennali, known as BTPs, as Italian government bonds.
Italian banks, including Intesa Sanpaolo SpA and UniCredit SpA,
have increased their holdings of Italian bonds twofold over the
past three years.
International banks "can commit" to raising the share of Italy's
bonds owned by foreigners to 40% under certain conditions, AIBE
said.
Foreigners owned half of Italian sovereign bonds before summer
2011--that figure is now around 35%, according to official
data.
AIBE also said its members had with "determination" held on to
government bonds even as the spread, or interest-rate surcharge
Italy pays compared with benchmark German bonds, steadily narrowed.
Italy's 10-year spread is now below two percentage points, having
spiked above five percentage points at the end of 2011. The
declining yield represent capital gains on the bonds the banks
owned.
Enrico Letta resigned as prime minister last week and his
presumed successor, Matteo Renzi, expects to face a parliamentary
confidence vote next week.
AIBE urged Italy's government to contain public spending, "as
agreed with the European Central Bank," adding that the ECB's
"protective umbrella" is bolstering the reliability of the
country's public finances.
Write to Christopher Emsden at chris.emsden@wsj.com