ROME — Months before the global financial meltdown this fall, the talk in the boisterous cafes of Rome and Madrid had turned from sports and politics to economic woes.
Despite increasingly bleak outlooks, however, the international financial panic did not hit Italy and Spain as hard as other European nations. Unlike France, Britain or Germany, there have been no major bank failures or rushed bank rescues south of the Alps or the Pyrenees.
Why? The reasons range from the prudence and discipline of institutions and individuals to the existence of large informal economies, analysts say. Not to mention remaining a bit old-fashioned amid modernization.
"Italians distrust banks," said Mary Merva, an American economist at John Cabot University in Rome. "When you are not tied to institutions, that gives you a lot of flexibility. There are credit networks that don't rely on institutions to get cash, but rather personal relationships. Italians often go to friends and family when they need money to start a business or buy a home."
In recent years, Italy and Spain have enjoyed prosperity combined with a lifestyle -- food, fashion, leisure -- that is the envy of their northern neighbors.
Italy belongs to the Group of 8 club of wealthy nations thanks to traditions of industry and small-business acumen. Spain's economy now rivals Italy's after a decade of modernization propelled by real estate, construction and aggressive investment in Latin America.
But certain prudent habits remain ingrained from the years when the two nations sent out humble immigrants instead of free-spending tourists.
In a speech to Parliament here at the height of the international crisis Oct. 9, Economy Minister Giulio Tremonti explained that Italian banks were solid. Unlike most European banks, which were exposed by dangerous investment overseas to the American subprime mess and other financial toxins, Italian banks had not engaged in creative financing or other risky operations, he said.
"A characteristic of the Italian banking system is its less sophisticated character that has protected us from elements of the crisis we see in other European countries," Tremonti said.
The Spanish banking sector, on the other hand, stands out for the sophistication and international muscle of Banco Santander and other giants. Nonetheless, government regulators and the banks themselves have shown notable discipline and prudence that has kept them safe.
