Deliberations of the CICR and Urgent DM - Deliberation of 29 March 1994

Rome, date .................................... Ministry of the Treasury Via XX Settembre, 97

Interministerial Committee for Credit and Savings

SECRETARIAT

DELIBERATION 29 MARCH 1994

Prudential regulation of financial intermediaries registered in the special list referred to in Article 107 of the Consolidated Text of Laws on Banking and Credit Matters.

THE INTERMINISTERIAL COMMITTEE FOR CREDIT AND SAVINGS

Having seen Article 107, paragraph 2 of Legislative Decree 1 September 1993, No. 385 (hereinafter T.U.), pursuant to which the task of issuing to intermediaries registered in the special list, in conformity with the deliberations of the CICR, provisions concerning capital adequacy and risk containment in its various forms, is delegated to the Bank of Italy;

Having seen the Decree of the Minister of the Treasury of 27 August 1993, concerning the requirements and criteria for the registration of financial intermediaries referred to in Article 6 of Law 197/91 in the special list referred to in Article 7 of the same law;

Having seen the Decree of the Minister of the Treasury of 17 November 1993, which has, among other things, confirmed the criteria for registration in the special list referred to in Article 107 of the T.U., contained in the aforementioned Decree of the Minister of the Treasury of 27 August 1993;

Considering that the multifunctionality of the

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Rome, date .................................... Ministry of the Treasury Via XX Settembre, 97

Interministerial Committee for Credit and Savings

SECRETARIAT

financial intermediaries, determining the accumulation of risks of different nature on these intermediaries, makes it necessary to establish general prudential measures to address the different types of risk connected with the operational scope chosen by the said intermediaries;

Evaluating the need to provide specific prudential interventions towards individual intermediaries that show an unfavorable capital, economic, or financial situation;

Noting the appropriateness that the regulation referred to in the aforementioned Article 107, paragraph 2 of the T.U. be introduced according to criteria of gradualness;

DELIBERATES

1. Scope of Application

1.1. The financial intermediaries registered in the special list referred to in Article 107 of the T.U. (hereinafter financial intermediaries) shall adhere to the instructions on capital adequacy and risk containment that will be issued by the Bank of Italy in conformity with the criteria subject of this deliberation.

2. Capital Adequacy.

2.1. The Bank of Italy will issue general provisions to regulate, also fixing the extent, the relationship between supervisory capital and the risk, in its various configurations, assumed by financial intermediaries. Simplified capital coverage systems calculated in an all-encompassing manner may be provided where certain types of risks are not considered relevant in the framework of the activity overall carried out by financial intermediaries.

2.2. The Bank of Italy issues instructions to:

• determine the methodologies for the detection and measurement of the different types of risk relevant in the activities carried out by financial intermediaries;
• define the positive and negative aggregates that contribute to determining supervisory capital.

To this end, the Bank of Italy takes into account the methodologies for determining corporate risk and own funds applied to other operators in the credit and financial market. In the definition of parameters, the Bank of Italy also refers to the provisions on the financial statements of financial entities referred to in Legislative Decree 27 January 1992, No. 87 and its implementing measures.

2.3. For financial intermediaries that provide payment services without assuming risks other than general business risk, the Bank of Italy, in order to preserve conditions of continuity in the conduct of the activity, provides, instead of the capital coverage systems indicated in sub 2.1, a minimum capital endowment proportional to fixed operating costs.

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Rome, date .................................... Ministry of the Treasury Via XX Settembre, 97

Interministerial Committee for Credit and Savings

SECRETARIAT

4. Other Measures for Risk Containment

3.1. The Bank of Italy provides general measures to promote, in relation to the type of activity carried out, an adequate fragmentation of risks and a balanced financial structure of the intermediaries in question.

4. Financial Intermediaries Belonging to Banking Groups

4.1 In the definition of the provisions referred to in the previous paragraphs 2 and 3, the Bank of Italy, for financial intermediaries belonging to credit groups, takes into account the needs for coordination between the regulation under this deliberation and the consolidated supervision discipline pursuant to Articles 65 and following of the T.U.

5. Particular Measures

5.1. The Bank of Italy may provide, where the capital, economic, or financial situation of an intermediary requires it, the application of more restrictive measures than those determined generally.

6. Transitional and Final Provisions

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Rome, date .................................... Ministry of the Treasury Via XX Settembre, 97

Interministerial Committee for Credit and Savings

SECRETARIAT

6.1. The Bank of Italy proceeds with the application of the regulation subject of this deliberation according to a criterion of gradualness that concerns both the activation times of the instruments and the recognition to intermediaries of a period of adjustment to the provisions that will be issued.

This deliberation will be published in the Official Gazette of the Italian Republic.

Rome, 29 March 1994

THE PRESIDENT P. Barucci