Decree of the Minister of the Treasury, President of the CICR, of 22 June 1993, No. 242632

MODULARIO
T. - R.G.S. - 111
SECRETARIAT OF THE INTERMINISTERIAL COMMITTEE FOR CREDIT AND SAVINGS

MOD. 211

242632
The Minister of the Treasury

HAVING REGARD TO Legislative Decree No. 481 of 14 December 1992, implementing Council Directive 89/646/EEC of 15 December 1989, and in particular Article 22, paragraph 1, letters a) and c), which provides that the Bank of Italy, in accordance with the directives of the Interministerial Committee for Credit and Savings, issues general instructions to credit institutions regarding the shareholdings they may hold;

HAVING REGARD TO Legislative Decree No. 356 of 20 November 1990, containing among other things provisions for the regulation of the credit group, and in particular Article 30 concerning regulatory supervision of the credit group, also with regard to shareholdings they may hold;

HAVING REGARD TO Legislative Decree No. 528 of 30 December 1992, implementing Council Directive 92/30/EEC of 6 April 1992 on the consolidated supervision of credit institutions, and in particular Articles 4 and 5 containing provisions respectively on regulatory supervision and the compliance of credit authorities;

HAVING REGARD TO Article 12 of Council Directive 89/646/EEC of 15 December 1989 concerning the shareholdings that credit institutions may hold in undertakings other than credit and financial institutions;

HAVING REGARD TO Law No. 287 of 10 October 1990, containing provisions for the protection of competition and the market;

HAVING REGARD TO the resolutions of the Credit Committee of 28 January 1981, 27 October 1983, 19 September 1986, and 6 February 1987 regarding the shareholdings that credit companies and special credit institutes may hold;

HAVING REGARD TO the Ministerial Decree of 16 October 1991, which regulates the acquisition of controlling shareholdings by credit companies in financial holding companies, with registered offices in Italy and abroad;

CONSIDERING that the aforementioned Directive 89/646/EEC recognizes the possibility for credit institutions to operate in all financial sectors listed in the annex to the Directive itself, directly or through structures possessing independent legal personality;

NOTING the appropriateness of allowing credit institutions and groups forms of access to the capital of non-credit and non-financial enterprises, also with a view to greater uniformity of competitive conditions within the European single market;

NOTING therefore the need to replace the current provisions with a new and unified regulation of the shareholdings held by credit institutions and credit groups;

AFTER CONSULTING the Interministerial Committee for Credit and Savings in its meetings of 10 and 11 June 1993;

DECREES

1. Eligible Shareholdings

This decree sets out the criteria to which the Bank of Italy adheres in regulating the matter of shareholdings held by national credit institutions referred to in Article 1, paragraph 2, letter a), of Legislative Decree No. 481/92, excluding cooperative credit unions, and by credit groups registered in the roll referred to in Article 28 of Legislative Decree No. 356/90.

Credit institutions and groups may hold shareholdings in credit institutions, financial institutions, instrumental companies, insurance companies, and other enterprises, in compliance with the instructions issued by the Bank of Italy.

The total amount of investments in shareholdings and real estate may in any case not exceed the limit of regulatory capital as defined at the Community level regarding own funds.

In regulating the shareholdings held by credit institutions and groups, the Bank of Italy takes into account what is provided for in Article 4 of Legislative Decree No. 528/92.

2. Shareholdings in Credit Institutions, Financial Institutions, and Instrumental Companies

Credit institutions and groups may freely hold shareholdings in other credit and financial institutions, save as provided by Law No. 287/90.

The power to authorize the exceeding of predetermined thresholds, not lower than 10 percent of the capital of the participated credit or financial institution, as well as the acquisition of control in instrumental companies, is reserved to the Bank of Italy. Minority shareholdings in companies carrying out auxiliary activities for group companies fall under the regulation provided for in paragraph 4 of this decree.

In order to preserve the adequacy of own funds of credit institutions and groups, the Bank of Italy may subject to authorization the assumption of shareholdings that determine the exceeding of a relevant percentage, not lower than 10 percent of the regulatory capital of the participant.

In issuing the authorizations within its competence, the Bank of Italy takes into account the capacity of the participating subject, in relation to its technical situation, to organize itself in complex structures and to expand into sectors of complementary operations. The Bank of Italy also verifies that the articulation of the credit group does not hinder the exercise of consolidated supervision.

3. Shareholdings in Insurance Companies

Credit institutions and groups may assume shareholdings in insurance companies, in compliance with the procedures provided for the assumption of shareholdings in credit and financial institutions, without prejudice to the powers of ISVAP (the Italian Insurance Supervisory Authority) in this matter, within the limit of 40 percent relative to the capital of the participant, calculated at individual and consolidated levels.

Within the credit group, without prejudice to the aforementioned limit at the consolidated level, for shareholdings of this type assumed by a single credit institution belonging to the group, a limit equal to 60 percent of the capital of the participant is established.

The power to authorize the exceeding of predetermined thresholds, not lower than 10 percent of the capital of the insurance company or not lower than 10 percent of the regulatory capital of the participant, is reserved to the Bank of Italy.

4. Shareholdings in Non-Credit and Non-Financial Enterprises

In order to complete the range of functions that credit institutions can perform in relations with operators in the productive world, the acquisition of shareholdings in the capital of enterprises other than those referred to in paragraphs 2 and 3 is permitted.

The assumption of shareholdings is carried out in compliance with the prudential criteria and limits indicated below, the implementation of which is entrusted to the Bank of Italy. Enterprises in which shareholdings are to be acquired must be selected by credit institutions and groups based both on the revenue advantages deriving from such operations and on the need to avoid that new opportunities translate, for the participant, into an excessive degree of immobilization of assets. These opportunities enrich the range of financing instruments for enterprises and aim to favor both capital strengthening and the assertion in regulated markets of companies with good economic and development prospects.

For these purposes, the regulation will provide that, with regard to enterprises in non-transitory difficulty, the conversion of credits into shareholdings and the subscription of shares is prohibited. Participatory interventions in enterprises in transitory difficulty may be carried out provided they are within plans that provide for their economic and financial rebalancing. Such operations will be assisted by particular precautions, providing procedures that may also lead to specific checks. Forms of precaution will also be provided for the acquisition of shares deriving from debt recovery.

The holding thresholds provided for in this decree are fixed taking into account what is established by Article 12 of Directive 89/646/EEC, with reference to the capital of the participant, and the principle of separation between banking and industry, with reference to the percentage of interest in the capital of the participated company.

Regarding the holding limits determined relative to the capital of the participant, investments are freely held up to the limits of 3 percent and 15 percent, respectively for the single participation and for the aggregate of shareholdings.

The Bank of Italy may allow certain credit institutions and groups to invest in such shareholdings up to the limit of 6 percent of the regulatory capital of the participant for the single interest and 50 percent for the aggregate of shareholdings.

These higher holding thresholds for credit institutions and groups are fixed by the Bank of Italy taking into account:
1) the experience gained in the sector;
2) the capacity to face risks, with reference to capital adequacy, concentration of credit, balance of the financial situation, and exposure to market risks;
3) the adequacy of its organizational structure, evaluated also by reference to the capacity to select its clientele.

For the aforementioned authorization, credit institutions and groups must also present an amount of capital not lower than a minimum threshold fixed by the Bank of Italy and a satisfactory economic-capital situation.

The Bank of Italy may also identify certain specialized credit institutions and groups to which it may allow investment in shareholdings of this type, up to a maximum amount, determined in relation to regulatory capital, of 15 percent, with reference to a single participation, and 60 percent, with reference to the aggregate of qualified shareholdings, as defined by Article 1 of Directive 89/646/EEC.

For the identification of these latter subjects, the Bank of Italy takes into account the requirements provided for banks and groups authorized and verifies that the structure of the liabilities' maturities of the participating credit institution is consistent with the broader commitment allowed in this form of corporate finance.

For the generality of credit institutions and groups, the minimum portion of the ceiling to be reserved for investments in shares of companies listed on regulated markets or for which listing has been requested may also be established.

With reference to the need for separation, it is established that shareholdings in enterprises other than those referred to in paragraphs 2 and 3 may not exceed the limit of 15 percent of the capital of the participated company. This limit may be exceeded by authorized and specialized credit institutions and groups; the value of the participation must be contained within the amount of 2 percent of the regulatory capital of the participant.

With regard to particular types of shareholdings or to the exceeding of the holding limits indicated by the implementing provisions of this decree, the Bank of Italy may require the observance of conditions for the assumption or maintenance of shareholdings.

The Bank of Italy identifies the prudential criteria for the holding of shareholdings in non-banking and non-financial enterprises:

• that have reported unsatisfactory balance sheet results;
• whose securities are not listed on regulated markets nor has listing been requested for them.

5. Branches in Italy of Extra-Community Credit Institutions

The Bank of Italy regulates the application of the provisions of this decree to branches in Italy of extra-Community credit institutions referred to in Article 1, paragraph 2, letter c), of Legislative Decree No. 481/92.

6. Final Provisions

This decree replaces the resolutions of the Interministerial Committee for Credit and Savings of 28 January 1981, 27 October 1983, 19 September 1986, and 6 February 1987 regarding the shareholdings that credit companies and special credit institutes may hold, as well as the Ministerial Decree of 16 October 1991.

Rome, 22 JUNE 1993

THE MINISTER