The European Commission has found the resolution plans of Banca
delle Marche, Banca Popolare dell'Etruria e del Lazio, Cassa di
Risparmio di Ferrara and Cassa di Risparmio della Provincia di Chieti
(combined market share of about 1% in Italy) to be in line with EU state
aid rules. This follows the decision of the Bank of Italy to put the
four banks, all of which had already been under special administration,
into resolution in line with EU rules on Bank Recovery and Resolution.
In particular, the Commission found that Italy's plans to use the
national resolution fund minimise the need for state aid and limits
distortions of competition, while preserving financial stability.
Customer deposits will remain fully protected.
EU Commissioner in charge of competition policy, Margrethe Vestager, said:...
"The
Commission's decisions enable the four banks' orderly exit in a way
that minimises the use of public funds and any competition distortions
resulting from the measures. It is critical that shareholders and junior creditors bear the costs and losses of the bank failures rather than taxpayers.I also welcome Italy's decision to use the bank resolution tools for the first time in Italy, allowing these failing banks to be managed while preserving financial stability."
The
Italian authorities proposed resolution plans for the banks that
foresee the resolution of each bank and the immediate creation and
capitalisation of four temporary bridge banks. All of the banks' assets
and liabilities, except remaining equity and subordinated debt, will be
transferred to these bridge banks. This transfer will stabilise the
activities that were formerly carried out by the banks while also
protecting depositors. The objective is to sell the bridge banks in an
open and non-discriminatory process with the aim to maximise the sales
price.
Italy's newly created resolution fund will provide
€3.6 billion to the bridge banks, both to cover the negative difference
between the transferred assets and liabilities and to capitalise the
bridge banks. In line with European legislation, this will be financed
by contributions from the Italian banking sector to the resolution fund.
The measures also include a transfer of impaired assets from the bridge
banks to a newly created Asset Management Vehicle. The resolution fund
will guarantee this impaired asset measure that further strengthens the
balance sheets of the bridge banks. The benefit of such a guarantee has
been quantified as approximately €400 million in additional support
from the resolution fund. These interventions from the resolution fund
qualify as State aid under EU state aid rules.
The
resolution measures have been designed and taken by the national
resolution authority and the Commission assessed the plans under its
rules on State aid to banks in the context of the financial crisis ('2013 Banking Communication').
It found that for these four banks, the resolution measures are in line
with the overarching objective of preserving financial stability.
Existing shareholders and subordinated debt holders contributed to the
costs, reducing the need for the intervention by the resolution fund in
line with burden-sharing principles. In order to limit distortions of
competition, the bridge banks will only exist for a limited amount of a
time and a prudent management policy will be implemented. Finally, the
Commission will also assess under EU state aid rules the viability of
the entities resulting from the sale of the bridge banks.
Background
The common EU rules on state support in favour of banks in the context of the financial crisis
encourage the exit of non-viable players, while allowing for the exit
process to take place in an orderly manner so as to preserve financial
stability. Moreover, the rules ensure that the aid is limited to the
minimum necessary and that the distortions of competition brought about
by the subsidies, which give aided banks an advantage over their
competitors, are mitigated.
On 16 November 2015 Italy transposed the Bank Recovery and Resolution Directive (2014/59/EU)
into national legislation. The Bank Recovery and Resolution Directive
rules equip national authorities with the necessary tools and powers to
mitigate and manage the distress or failure of banks or large investment
firms. It allows national authorities to safeguard financial stability,
while taking appropriate measures to limit the use of public funds and
mitigate the distortions of competition resulting from the aid,
including notably the sale of bridge banks.
Banca delle Marche
The
bank is active in the Marche region and in other areas of Central
Italy: Umbria, Emilia Romagna, Lazio, Abruzzo and Molise via a network
of 308 branches. The bank's business model is focused on lending to SMEs
and retail clients. According to the latest published figures at the
end of 2012, Banca Marche had total assets of €22.7 billion, net
customer loans of €17.3 billion and deposits of €7.2 billion. The bank
was placed under special administration on 15 October 2013.
Banca Popolare dell'Etruria e del Lazio
The
bank is listed on the Italian stock exchange and operates mainly in
Tuscany and Central Italy. It has a network of 175 branches and conducts
a business focused on lending to SMEs and retail clients. According to
the latest published figures of 30 September 2014, the group had total
assets of €12.3 billion, net customer loans of €6.1 billion and deposits
of €6.4 billion. The bank was placed under special administration on 10
February 2015.
Cassa di Risparmio di Ferrara
Cassa
di Risparmio di Ferrara is a regional bank whose business is focused on
lending to SMEs and private clients with funding mainly from retail
customers. It operates with 106 branches in the geographical area around
Ferrara. According to latest published figures at the end of 2012 the
Group had total assets of €6.9 billion, net customer loans of €4.6
billion and deposits of €3.4 billion. The bank was placed under special
administration on 27 May 2013.
Cassa di Risparmio della Provincia di Chieti
Carichieti
(founded in 1862) is a medium-sized regional bank with a focus on the
Italian region of Abruzzo with a traditional business focused on lending
to SMEs and retail clients. According to the latest published figures
at the end of 2013, the bank had total assets of €4.7 billion, €2.1
billion of net customer loans and deposits of €2.5 billion. The bank was
placed under special administration on 5 September 2014.
The non-confidential versions of the four decisions will be published in the State aid register on the competition website
under the case numbers SA.39453, SA.41134, SA.41925 and SA.43547 once
eventual confidentiality issues have been resolved.
