Featured Product

    EC Approves Orderly Liquidation and Guarantee Scheme for Italian Banks

    November 20, 2020

    Under the EU state aid rules, EC has authorized an orderly liquidation scheme for small banks in Italy for 12 months as well as a liquidity support scheme to grant guarantees to banks in Italy with the aim of supporting them in case of need. The liquidity support scheme will allow the Italian State to grant guarantees on newly issued liabilities and on Emergency Liquidity Assistance (ELA) from the central bank, for up to a total nominal amount of EUR 19 billion. Only viable Italian banks, as defined by the competent supervisor, with temporary liquidity issues will have access to the measure. The liquidity support measure will be valid until May 20, 2021.

    EC has authorized under EU state aid rules an Italian liquidation scheme for small banks (other than cooperatives) with total assets of less than EUR 5 billion. The authorization has been granted for 12 months from November 20, 2020. The scheme facilitates the work of the Italian authorities when the competent national authorities have found an eligible bank to be failing, have concluded that the resolution of the bank was not in the public interest, and consequently put the bank into compulsory administrative liquidation. When assessing the public interest the authorities must ensure that the compulsory administrative liquidation achieves the resolution objectives to the same extent as resolution. Under the scheme, the Italian state will be able support the sale of assets and liabilities of a failed bank to another bank. The buyer will be selected on the basis of a competitive bidding process and should viably integrate the acquired activities within one year. The shareholders and subordinated creditors of the failed banks will have to contribute to cover the losses, thus helping to minimize the need for aid.

    EC found that the Italian measure is in line with the conditions set out in the 2013 Banking Communication for orderly liquidation schemes for small banks, with the exception of the EUR 3 billion balance sheet threshold. In this respect, the Italian scheme will be available to small banks (other than cooperatives) with total assets of less than EUR 5 billion. However, given the exceptional circumstances linked to the coronavirus outbreak and the safeguards against undue competition distortions that Italy has included in the scheme, EC has accepted the higher threshold of EUR 5 billion. EC will also temporarily accept that higher thresholds for similar schemes are applied by other Member States in the context of the coronavirus outbreak, as long as similar safeguards to those implemented by Italy can be demonstrated.

     

    Related Links

    Keywords: Europe, EU, Italy, Banking, State Aid Rules, Emergency Liquidity Assistance, Loan Guarantee, Orderly Resolution, Small Banks, Resolution Framework, EC

    Related Articles
    News

    BIS Innovation Hub Sets Out Work Program for 2021

    BIS Innovation Hub published the work program for 2021, with focus on suptech and regtech, next-generation financial market infrastructure, central bank digital currencies, open finance, green finance, and cyber security.

    January 22, 2021 WebPage Regulatory News
    News

    EC Plans to Consult on Crisis Management and EDIS Framework Revisions

    In an article published by SRB, Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, discussed the progress and next steps toward completion of the Banking Union.

    January 21, 2021 WebPage Regulatory News
    News

    EBA Finalizes Remuneration Standards for Investment Firms in EU

    EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).

    January 21, 2021 WebPage Regulatory News
    News

    ECA Recommends Actions to Enhance Resolution Planning for Banks

    EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.

    January 20, 2021 WebPage Regulatory News
    News

    BoE Publishes Key Elements of the 2021 Stress Testing for Banks in UK

    BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.

    January 20, 2021 WebPage Regulatory News
    News

    PRA Proposes Rules on Identity Verification of Depositor Protection

    PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).

    January 20, 2021 WebPage Regulatory News
    News

    FSB Publishes Work Program for 2021

    FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.

    January 20, 2021 WebPage Regulatory News
    News

    FCA Issues Update on Move to New Data Collection Platform

    FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.

    January 20, 2021 WebPage Regulatory News
    News

    Bundesbank Publishes Derivation Rules for Reporting by Banks

    Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.

    January 19, 2021 WebPage Regulatory News
    News

    FED Revises Capital Planning and Stress Testing Requirements for Banks

    FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.

    January 19, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6488