Regulatory Alerts2009-08-25
Communications - August 3, 2009 - Prudential Treatment of the State's Last Resort Guarantee
The Bank of Italy issued a communication on August 3, 2009, establishing the prudential treatment for exposures guaranteed by the SME Guarantee Fund and assisted by the State's last resort guarantee under Article 11 of Decree-Law 185/2008. Banks and intermediaries may apply favorable risk-weighting factors associated with the Italian State or substitute default probabilities with those of the State for capital requirement calculations, provided the guarantees meet specific criteria of irrevocability and coverage. This favorable treatment applies to interventions approved after the entry into force of the implementing Ministerial Decree of March 25, 2009, and excludes subsidiary counter-guarantees that do not meet personal protection requirements.