Italian co-operative banks calls on government not to stall sector reforms

The changes, planned by the previous administration, are being reconsidered by the populist new coalition

Planned reforms to Italy’s co-operative banks had been welcomed by the sector – but now they are being reconsidered by the country’s new coalition government.

Senior figures within the ruling coalition have expressed themselves against the changes, which were developed under the previous administration. Opponents include two members of the right-wing League, senator Alberto Bagnai and Giancarlo Giorgetti, the new undersecretary to the presidency of the council of ministers.

An academic by profession, Mr Bagnai argues the reform would bring Italian banks under closer scrutiny from the European Central Bank, creating a regulatory asymmetry with banks in Germany.

Under the 2016 reform passed by former prime minister Matteo Renzi, credit co-operatives (BCCs) must become affiliated to one of the three authorised co-operative banking groups. An individual BCC may remain independent only if it becomes a limited liability company and ceases to be a mutual. Any BCCs that do not join a larger co-operative banking group or transform into a company will be liquidated and wound up.

Each co-operative banking group must have a parent company which is regulated and authorised to carry out banking activity and have share capital of at least €1bn. The parent company must be incorporated as a limited liability company with the majority of the shares held by the local BCCs in the group. The authorised parent companies are Raiffeisen Bank, which can operate the Alto Adige, Cassa Centrale Banca, based in Trento, and ICCREA Banca, based in Rome.

The banking groups have powers to intervene and direct the BCCs but these can maintain their autonomy as long as they stay financially sound. The process is expected to be completed by early 2019 when the banking groups will fall under the direct oversight of the European Central Bank.

Responding to the debate around the reform of BCEs, Confcooperative, the Italian confederation of co-operatives, and Federcasse, the federation of rural credit co-ops, reaffirmed their support for the process.

In a written statement, the two trade bodies said: “It is in everyone’s interest, and in particular of affiliated banks, members, businesses and local communities, that the reform starts in the times currently foreseen by the legislation, with the start of co-operative banking groups scheduled 1 January 2019, the latest.

“We are convinced that the implementation of the reform is a decisive step towards the future for Italian co-operative credit.”

A similar reform process in 2016 saw Italy’s popular banks with assets exceeding € 8bn become limited liability companies in 2016. Unlike BCCs, popular banks also lost their mutual dimension by merging as well as their one member/ one vote rule. Two of the country’s largest popular banks, Banca Popolare di Milano (BPM) and Banco Popolare, merged in Banco BPM in 2017 to meet this request, forming the country’s third largest retail and commercial banking group.

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