Ten years ago, Roberta Tonelli, a shoe saleswoman from a small city 30 miles south of Florence, took out an €800,000 loan to buy a small farmstay hotel in the nearby hills. It was a big step for her and her husband Claudio, a municipal worker, and there was a dream behind it. “We wanted a calmer life, a naturalistic refuge,” she says. “It was nothing elegant, nothing refined.” 

Last week, Ms Tonelli was in the back room of a café in her home town of San Giovanni Valdarno, the birthplace of Renaissance painter Masaccio, describing how it all went wrong. The agriturismo was lost — all she has left of it is an old pamphlet — and she is still heavily indebted to Monte dei Paschi di Siena, her bank. 

“Something like this destroys you. I have thought of doing away with myself more than once, really. But then I have my husband and my two daughters who are my stars,” Ms Tonelli says. 

Ms Tonelli’s inability to repay MPS is not just the unfortunate tale of a single credit gone awry. It is emblematic of the massive stock of gross non-performing loans — valued at about €360bn — weighing on Italy’s banking system and the Italian economy since the recession. 

Some of those troubled loans were granted — probably too generously — to individual borrowers such as Ms Tonelli who were looking to build a small business, while others went to midsized and larger companies mainly in the construction and manufacturing sectors that were also damaged during the downturn. 

Italy was one of the only countries in Europe — along with Greece — to have a triple-dip recession. So it’s obvious there should be insolvent debtors,” says Marcello Messori, director of the Luiss school of European political economy in Rome. “But the banks allocated funds in a distortive and not very selective way.” 

The lingering presence of such troubled loans on the balance sheets of Italian banks has alarmed investors, leading to a 55 per cent plunge in their share prices over the past year. A sharp sell-off following the UK’s shock vote last month to leave the EU has raised concern among policymakers about the danger such lenders pose to the wider eurozone. 

Matteo Renzi, the country’s centre-left prime minister, is now pondering the use of public money to inject capital into struggling banks saddled with bad loans — particularly MPS — to avert a full-blown crisis. But if he does not succeed in calming markets and avoiding a political backlash from any intervention, his own job could be on the line. 

The financial strife for Ms Tonelli, who is now 45, began about two years after the purchase of the farmstay, called Podere Grania, when EU subsidy funds that were vital to her business plan were denied. Then her sister, who helped run the country hotel, was diagnosed with pancreatic cancer and died. 

Roberta Tonelli - agriturismo story from Davide Ghiglione
Problems with subsidies and recession hit Roberta Tonelli's ability to repay an €800,000 loan

Finally, the recession hit, and the flow of customers — mainly Dutch and French tourists — dried up. Ms Tonelli fell behind on her semi-annual payments to the bank — which ranged from $10,000 to $15,000 — despite throwing everything she had at it. 

“We put my grandmother’s money in, we put my aunt’s money in, we put my sister’s money in. We looked everywhere for money,” she adds. “I’m not saying we didn’t make mistakes, but we did everything to keep the place, It was our life’s project”. 

Because of MPS, Tuscany has emerged as one of the two hubs of Italy’s non-performing loan troubles, along with Veneto, the wealthy and heavily industrialised region of north-eastern Italy where a number of banks have also been struggling. 

Roberta Tonelli story - Agriturismo (that no longer exists. It has been separated into private apartments) was called "Podere Grania", the building is located in Castelfranco di Sopra, province of Arezzo, Tuscany. The building used to be a farmhouse built in the 1400s.
The Tuscan property that the Tonelli family hoped to operate as a farmstay

“We have some paradigmatic stories of value destruction here,” says Lorenzo Gai, a professor of economics at the University of Florence, Tuscany’s capital. “The process with which MPS managed its lending didn’t work, and that’s a euphemism.” The Siena bank was being overly generous, he added: “Maybe it was because they were trying to be rooted in the territory — they were trying to do good, but instead they ended up putting their bank in trouble.”

Ms Tonelli’s plight worsened when she put the property on the market at the height of the eurozone’s market turmoil. “There was no way to sell it. There was no way. We had 22 agencies working on it,” she says. She did find one buyer, a friend, who offered €300,000 — about a third of the original purchase price — in 2012. But MPS rejected it, which makes her angry to this day.

“We offered solutions that could have been convenient, also for them. They responded with obtuseness dictated by their protocols, it was absurd,” she says. Eventually, MPS launched an auction for the property, splitting the farmstay into five different units, but Ms Tonelli was aghast when they offered to halt the process, but only in exchange for a €100,000 payment, which she could not meet. “It was a joke,” she adds. 

MPS, which is under new management and has created a 700-strong team to improve the efficiency of its credit retrieval operations, declined to comment on Ms Tonelli’s case. But one external adviser to the bank said: “The bank followed all the correct legal procedures to try to recoup its loan. It is of course very sad this lady had all these horrid problems but banks have to try to get their money back, unfortunately, whatever the circumstances.” 

Ms Tonelli and her husband have since moved into a rental apartment back in town. The enactment of a personal bankruptcy law in 2012 gave her hope since it would allow her to erase her debt. But her bid was denied by a local court, which she believes was “servile” to MPS since in other jurisdictions across Italy similar applications were granted.

Now she is waiting for MPS to tell her how much she owes on the farmstay debt, net of the proceeds from the auction. Her estimate is that it will be in the range of €700,000 to €800,000 — one of many debts that could weigh on MPS, the Italian banking system and the global economy for years to come. 

“I will never be able to pay, and when I die my daughters will go to the judge and renounce my inheritance, otherwise the debt will be passed on to them,” Ms Tonelli says. “They shouldn’t even go to the funeral parlour first. Even my 15-year-old knows this.”

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