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.
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.39543, SA.41134, SA.41925 and SA.43547 once eventual confidentiality issues have been resolved.