In tackling the problems linked to the governance and structure of the banking system, the government has legislated a series of measures inclusive of the reform of the mutual banks and the reform of the CCB.
The reform of the mutual banks is paving the way to a more modern financial system in Italy, and is doing so through various modifications of the Consolidated Act of Banking and Credit Laws (Legislative Decree No. 385 of 1 September 1993 - Italian Version). The reform, which has been welcomed by the ECB, involves the legal form and the governance of the institutions, and introduces size limits for the adoption of the form of mutual bank, with those mutual banks holding assets of more than €8 billion required to be transformed into joint-stock companies. The reform also provides for: i) the regulation of the extraordinary corporate actions (transformations and mergers) with the aim of introducing uniform rules for mutual banks, eliminating the majorities provided for such events that were provided by company statutes; ii) the introduction of the possibility of issuing financial instruments with specific capital and voting rights; iii) the easing of the restrictions on the appointment of corporate governance bodies, with the vesting of greater powers with the shareholders meeting; and iv) the introduction of per capita voting limits, making it possible for the articles of incorporation to attribute more than one vote to shareholders who are legal persons. The same decree-law also outlines important changes for the smaller mutual banks, so as to provide incentives for shareholder participation and to make these banks more attractive to institutional investors.
The reform of the cooperative credit banks is part of the package of measures introduced by Decree-law No. 18 of 14 February 2016 (Italian Version), “Urgent measures concerning the reform of the cooperative credit banks, the guarantee on securitisation of the non-performing loans, taxation treatment in relation to insolvency proceedings, and collective funds management”.
The reform of the cooperative credit banks (CCB) allows for reducing the fragmentation of the sector, and for moving beyond the structural weaknesses resulting from the business model (heavily exposed to the trend of the economy in the core market of reference), organisational structures, and the small size of the individual banks.
The guidelines for the reform of cooperative credit may be summarised as follows:
- confirmation of the role of the CCB as cooperative banks serving local communities;
- better quality of governance and simplification of the internal organisation;
- more efficient allocation of resources within the system;
- the timely procurement of investor funds in the event of pressures on capital, including through the access of capital outside of the cooperative bank sphere;
- the unity of the system for enhancing competitiveness and stability over the medium/long term.