A Italian bank uses cheese as its security for loans
The cheese is kept in huge vaults, cleaned, turned and at times taste-tested
The bank charges between 3% to 5% interest, depending on the quality of the cheese
Editor’s Note: Isa Soares is a reporter with Marketplace Europe. Follow her on Twitter.
From the outside, Italy’s Credem Bank looks just like any other high security operation.
And indeed, behind the barbed wire and electronic fence are piles of golden blocks. But they are not made of precious metal – rather, they are ageing wheels of Parmesan cheese.
As I walk inside, I am hit by the pungent smell and then, by the size of the vaults.
Row after row, stacked up twenty shelves high, are 430,000 parmesan wheels. They’re worth up to 190 million euros.
The wheels are stored here as part of a cash-for-cheese loan that started with Credem bank, but dates back to the Medici era.
In simple terms, the bank takes the cheese from local parmesan producers in exchange for a cheap loan. It charges between 3% to 5% interest, depending on the quality of the cheese, and a fee for making sure the cheese matures properly in their air-conditioned, humidified vault.
This mechanism ensures that in the two years it takes the cheese to mature, credit keeps flowing. In these tough economic times, this allows producers to feed their cattle, pay their staff….and just keep producing. If for whatever reason, the cheese producer defaults on the loan, the bank has the cheese to sell on.
It’s no surprise then, Credem treats each wheel like gold. They clean it, turn it, hammer it, prick it and from time to time even taste certain batches.
Cristian Bertolini, an expert taster with the Parmigiano Reggiano consortium, tells me each batch has to meet strict criteria. If it doesn’t, the cheese is downgraded, the Parmigiano Reggiano imprint scraped off and then it’s sold simply as Italian cheese.
For the Caretti family, who have been producing cheese since 1925, the loan is hard currency which has enabled them to keep doing what they love. Right now, they have their own vault on site, financed by the bank. From time to time, they still use the bigger Credem vault.
It’s a strategy that has paid off. Every day, they make thirty two wheels of Parmigiano Reggiano, adding up to almost twelve-thousand wheels a year.
Davide Caretti, who has taken over the business from his father, candidly tells me that this is his life; that he intends to do this forever. Not even the early hours, the arduous work and the 40 kilo wheels can kill his dream. “It is not hard work. It’s a strong passion for me and for us,” he said.
It’s a passion as strong as the cheese itself, backed by a bank that takes a mature attitude to lending.