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Italy Is No Greece; Foreign Debt Is Low: UniCredit CEO

Some market players have said Italy will be the next to ask for a bailoutbut Federico Ghizzoni, chief executive of Italian bank Unicredit, told CNBC that the country is in a totally different situation than Greece.

Piazza Venezia, Rome, Italy
Panoramic Images | Getty Images
Piazza Venezia, Rome, Italy

“Yes Italy has a debt, it is higher than other countries, and it is 120 percent of the GDP but if you take the total debt of the country… the external debt is very low,” Ghizzoni said in an interview.

“What is important in this period of time is the deficit: it is only 4.6 percent, many other European countries have a different problem here,” he said.

The Italian deficit may not be as high as other European countries', but budget deficit is only a problem if growth doesn’t follow, according to Ghizzoni.

“I think that the real problem of Italy, where the government, all the time, should focus, is the growth. It is very low. So in the long run, this may generate a problem including a capability to reduce the debt,” he said, adding that this is why he doesn’t see Italy — unlike Greece and other countries he didn’t mention— as a problem today.

Indeed, Ghizzoni sees Greece as a much bigger problem than Italy, but disagrees with any re-profiling of the Greek debt.

“My opinion is that re-profiling or restructuring or re-cutting, whatever you want, would have been possible maybe one year ago,” he said, “no more now. It’s too late.”

Now Greece has to be supported to avoid defaultin the euro zone as there is no alternative, he said, not even the possibility of leaving the euro and going back to the national currency as some are considering.

“Clearly, you have to work much more in order to define a governance that can allow you to control what clients are doing. You have to avoid the risk to have another Greece in future,” Ghizzoni added. “But about Greece in itself, I don’t see an alternative but to help Greece.”

Italy's current central bank head, Mario Draghi, is the most likely candidate to become the next head of the European Central Bankafter Jean-Claude Trichet steps down in November, and Ghizzoni doesn’t believe that Draghi's appointment will be of any use to his home country.

“Mister Draghi is a very rigorous person, is a person with strong principle and surely will dedicate entire himself to Europe without giving preference to one country versus the other one,” Ghizzoni said.

“This respect I think is a guarantee for Europe, a guarantee of independence for the ECB. So he will be a good governor if he will be appointed,” he added.