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

    APRA Issues Interim Update to Policy Priorities for 2021 and Beyond

    In a letter addressed to the industry, the Australian Prudential Regulation Authority (APRA) set out an updated schedule of policy priorities for the banking, insurance, and superannuation industries.

    September 24, 2021 WebPage Regulatory News
    News

    EC Adopts Solvency II and Resolution Rules Package for Insurers

    The European Commission (EC) adopted a comprehensive review package of Solvency II rules in the European Union.

    September 22, 2021 WebPage Regulatory News
    News

    OCC Issues Booklets on Regulatory Reporting and Earnings

    The Office of the Comptroller of the Currency (OCC) issued Versions 1.0 of the "Earnings" and "Regulatory Reporting" booklets of the Comptroller's Handbook.

    September 22, 2021 WebPage Regulatory News
    News

    ECB Sets Out Results of Economy-Wide Climate Stress Tests

    The European Central Bank (ECB) published results of its economy-wide climate stress test, which aimed to assess the resilience of non-financial corporates and euro area banks to climate risks.

    September 22, 2021 WebPage Regulatory News
    News

    EBA Examines Implications of Increasing Use of Digital Platforms in EU

    The European Banking Authority (EBA) published a report on the use of digital platforms in the banking and payments sector in European Union.

    September 21, 2021 WebPage Regulatory News
    News

    HKMA Issues Updates on Policy Measures Intended to Ease COVID Impact

    The Hong Kong Monetary Authority (HKMA) published updates on the policy measures that were announced in context of the ongoing pandemic.

    September 21, 2021 WebPage Regulatory News
    News

    ISDA Responds to BCBS Proposal on Treatment of Cryptoasset Exposures

    The International Swaps and Derivatives Association (ISDA), along with several other associations, submitted a joint response to the Basel Committee on Banking Supervision (BCBS) consultation on preliminary proposals for the prudential treatment of cryptoasset exposures.

    September 21, 2021 WebPage Regulatory News
    News

    BIS Quarterly Review Discusses Developments in Fintech and ESG Space

    BIS published the September issue of the Quarterly Review, which contains special features that analyze the rapid rise in equity funding for financial technology firms, the effectiveness of policy measures in response to pandemic, and the evolution of international banking.

    September 20, 2021 WebPage Regulatory News
    News

    BCBS to Consult on Supervisory Practices for Climate Risks by Year-End

    The Basel Committee for Banking Supervision (BCBS) met in September 2021 and reviewed climate-related financial risks, discussed impact of digitalization, and welcomed efforts by the International Financial Reporting Standards (IFRS) Foundation to develop a common set of sustainability reporting standards

    September 20, 2021 WebPage Regulatory News
    News

    OCC Identifies Operational Risk Deficiencies in MUFG Union Bank

    The Office of the Comptroller of the Currency (OCC) issued a Cease and Desist Order against MUFG Union Bank for deficiencies in technology and operational risk governance.

    September 20, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7494