Stock markets and Economic - Your money

Billions in bad debts in italian banking sector lead to fears over fresh european economic crisis

EUROPE could be plunged into a new economic crisis later this week amid fears about the health of the Italian banking system.

On Friday, the European Banking Authority will release the results of comprehensive stress tests from 51 banks across Europe covering 70 per cent of the sector.

The tests will focus on the use of capital guidance to cover potential shortfalls and many fear disastrous results for Italian lenders including the worlds oldest bank, Banca Monte Paschi which is also the countrys third biggest lender.

The results have been the subject of discussion at a meeting of G20 Finance bosses in China over the weekend. Investors and political leaders fear that nearly $530 billion worth of bad debts held by Italian banks could trigger a new financial crisis in the eurozone already struggling with a Greek bailout and the unknown implications of the second biggest economy leaving after Brexit.

Italian banks are reported to have around 360 billion euros (A$528 billion) in non-performing loans. That restricts economic growth as it reduces the amount banks are able to lend and can be disastrous if companies find their debts called in or access to funds cut off.

Last week, European Central Bank boss Mario Draghi said European banks were slightly better than they were before but still needed to address the problem of weak profitability.

He said non-performing loans posed a significant problem for the future ability and the capacity the banks have of lending.

The warning comes amid new rules in Europe designed to protect taxpayers from costly bailouts which means investors wear the burden of bailouts first.

Earlier this month the IMF warned Italy will not return to pre-crisis growth levels until the mid 2020s. At present, the country has the second highest debt level in Europe after Greece.

Despite fears, Italian finance minister Pier Carlo Padoan sought to defuse the situation at the G20 meeting in China saying the country does not have a problem with its economy.

All the countries should relax: there is no Italian banking problem, he told AFP.

There is an economy which has been in recession for three years, there is accumulated non-performing loans, which have been dealt with.

He said the numbers that were floating around were vastly exaggerated and a few cases would be adjusted.

He also said there are no tensions between Italy and the European Commission on the issue.

We are not on a bailout regimen, we are in a bail-in regimen, and all the instruments that are considered are within those rules, he said. There is no need to bail out anybody.

EU economy chief Pierre Moscovici said any solution to Italys banking woes had to fit with the terms of the common market. The messages from the Italian representatives had been quite affirmative and reassuring, he added.

US officials said that Treasury Secretary Jacob Lew and Mr Padoan had discussed recent developments in the European banking sector in China.

In a statement, the US Treasury said that Mr Lew had noted that while Europes banking system is stronger as a whole due to reforms put in place in recent years, more work remains.

Banks should continue to clean up their balance sheets and address legacy asset quality issues, it said.

BBC business editor Robert Peston analyses the state of the monetary union in Europe.

Bizarre plan to regulate the size of chicken schnitzels

“HANDS off our schnitz.”

Thats the rallying cry of punters in Adelaide, where a bizarre plan has been hatched to crackdown on oversized portions of chicken schnitzel.

The nanny state has hit its peak in South Australia, with government-funded waste watchdog Keep South Australia Beautiful calling for the serving size of the classic pub fare to be regulated.

The reason? Apparently the mouth-watering dish is ending up in landfill.

KSAB boss John Phillips says the organisation is in talks with the State Government to trial the measure, which would force pubs and restaurants to downsize their schnitz.

Sometimes I watch the body language of people when the meal comes out their jaw drops literally when they see the size of some of the meals and a lot of the product is left on the plate, Mr Phillips told the ABC.

This is about educating people to look at their habits or behaviour so they can take a personal responsibility.

But the Australian Hotels Associations Ian Horne dubbed the plan a commercial disaster, saying it was a bit harsh to blame the poor schnitzel for all the woes of landfill.

Where do you draw the line? Do you start setting a standard for how many seeds and grains must be in a multigrain roll? Mr Horne said.

Social media users were equally unimpressed, pointing out the array of common sense solutions to the food waste problem.

Ask for a doggy bag, Michael Battista tweeted.

Bottled water sales booming in australia

AUSSIES may be moving away from sugary soft drinks and juices, but the health revolution has boosted the fortunes of the most ridiculous product we’re still paying for.

Yes, people are still buying bottled water in record numbers.

In 2015, about 5.3 million people, or 27.1 per cent of the population, drank bottled water in any given week, according to Roy Morgan. That was an increase on 4.9 million bottled water drinkers in 2014.

Mount Franklin, made by bottling company Coca-Cola Amatil, is by far the most popular brand, consumed by nearly 40 per cent of bottled water drinkers, followed by Coles Natural Spring Water on 14 per cent and Pump Pure Water on 12.8 per cent.

According to market research firm IBISWorld, the bottled water industry is worth $736 million and is projected to grow at an annualised rate of 2.4 per cent over the next five years to reach $826.8 million.

Coca-Cola Amatil dominates with just under 50 per cent market share, according to IBISWorld, followed by Asahi maker of the fourth most popular Cool Ridge which holds a 14.5 per cent market share.

Data from Euromonitor tells a slightly different story. It puts Coca-Cola Amatil on 37 per cent share of retail value, followed by Asahi on 17 per cent.

Euromonitor says sales of bottled water rose 8 per cent in 2015, with private label products leading by share of volume with 28 per cent. The research firm says while still bottled water makes up 74 per cent, sales of carbonated water are increasing.

You can thank Jennifer Hawkins for that, apparently.

Mount Franklin is known as Australias number one bottled water brand, and its lightly sparkling ambassador and former Miss Universe, Jennifer Hawkins, helped generate interest in flavoured bottled water, Euromonitor says.

The good news? The average retail unit price of bottled water continues to face downward pressure, falling by 1 per cent in 2015 largely due to strong promotional activity and the strength of private label products.

Euromonitor warns the premiumisation of bottled water is set to accelerate.

Australia is behind American consumers as Australians are said to have a very limited water palate and much to learn about the different taste profiles of water, the firm says.

Although new players such as nakd, Nu Pure, blk, Fuji made a mark in the country, in the US water sommeliers, much like a sommelier of wine, have been present since 2013 to help discern the different tastes of water.

In Australia, consumers are still more than willing to drink tap water, and Sydney Water Corporation is driving the tap campaign in New South Wales, encouraging local consumers to drink tap water.

IBISWorld says as disposable income increases in the next few years, consumers will begin shifting back to premium brands, slowing the private supermarket label trend.

Compared with many foreign countries, Australia still consumes a significantly lower volume of bottled water annually, which presents an opportunity for industry growth, IBISWorld says.

Poor tap-water quality has been a persistent issue in some areas, particularly in South Australia and Western Australia. This has increased these states reliance on bottled water. Population growth in these states is expected to contribute to rising bottled water use for general home consumption.

Find out if bottled water is really any better than tap water.

Bulk buying can halve your costs and not just at supermarkets

BUYING in bulk brings big discounts for grocery shoppers, and people prepared to look beyond the supermarket shelves can also pocket significant savings.

From cleaning products to meat, cheap things do come in big packages, consumer experts say.

I think most people consider it too hard, and dont understand how much money they are going to save. If you are halving your bills, its a massive amount of money that you dont have to work to earn, says founder Fiona Lippey.

But buying in bulk doesnt work for all things. Its pointless for perishables such as fruit and vegetables, and Queensland Consumers Association spokesman Ian Jarratt says its not a good idea if goods are going to be wasted.

Be careful that you dont consume more than what you normally would, he says.

Its easy to measure bulk prices against smaller packages at major supermarkets, which are the only retailers required by law to show the unit pricing of how much you get per 100g or 100ml. Jarratt says consumers have to work harder in other stores to compare the benefits of bulk buying, but its still worth shopping around.

Here are some goods that can be great to buy in bulk.


From multivitamins and fish oil to protein powder and weight-loss supplements, consumers can halve what they spend by choosing bulk packaging. You may need your smartphones calculator to work out prices per tablet or per gram, but its worth the effort.

Some health supplement makers have been dropping prices lately amid intense competition.


Jarratt says pet supply stores offer food, litter and other items in bulk packaging that can be much cheaper than the smaller versions.

Shop around and make sure you are getting a better buy. Costco operates on that basis things there are available in much bigger quantities.


The cleaning products aisle at the supermarket is an expensive place to buy these items. Hardware warehouses and cleaning product wholesalers offer larger and cheaper bulk purchases.

Lippey says wholesalers will sell to retail customers. Google wholesale cleaning supplies every region has them. Its where cleaners get their supplies. They dont want fancy labels, they just what a product that works, she says.


Lippey says you can halve your households meat bill by asking butcher about buying in bulk, then storing the portions in a chest freezer at home. Youll get many cuts of the cow so may need to do some research about recipes, she says.

Meat in a chest freezer is a massive saving. Its one of the few ways you can spend to save money

Twitter: @keanemoney