More Than a Touch of Honesty

Napoleon Bonaparte, something of a master at the game himself, once complained that "all Italians are plunderers." Italian bankers often seem to agree with this ungenerous assessment of their countrymen. "Every citizen," says an old banking maxim, "is a swindler until he produces documents to prove the contrary." Taking that attitude, Italian banks, including those owned by the state, have rarely opened their cash drawers for small personal loans.

They may soon change their ways. Moving boldly into a field that has belonged almost exclusively to pawnbrokers and loan sharks, who charge 30% to 100% interest, the Milan-based Banca d'America e d'ltalia, a subsidiary of the U.S. Bank of America, set up a small-loan program late in 1965. Its slogan: "Anyone who works can have credit." The cost of that credit is only 6% discount a year. And where loan sharks demand heavy collateral, the bank, for its one-year loans of up to $1,600, asks only for proof that the borrower is on a regular payroll.

No sooner had General Manager Antonio Tonello begun flooding the country with ads ("If you are honest and work, you can get money") than competitors charged that he was turning his bank into an undignified "hock shop." They jeered that before long he would be fleeced out of business. Tonello insisted that "the Italian man on the street is as good a credit risk as his counterpart in London and New York."

So he seems to be. In a report on the first full year of the program at a recent stockholders' meeting in Milan, Tonello announced that 13,000 borrowers had flocked to the bank's 83 branches, picked up a total of $6,500,000 in loans for everything from home improvements to honeymoons. For all the fears about hit-and-run borrowers, the loss rate was a low .3%--roughly the same as the U.S. average.

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