Requirements for Bank and Banking Group Parent Company Executives. Verification Procedure

REQUIREMENTS FOR EXECUTIVES OF BANKS AND PARENT COMPANIES OF BANKING GROUPS. VERIFICATION PROCEDURE.

With the launch of the Single Supervisory Mechanism (SSM), the task of verifying the requirements of executives of banks and parent companies (so-called fit and proper assessment) is carried out by the European Central Bank for executives of "significant" banks and by the Bank of Italy for those of "less significant" banks. Nevertheless, Article 93 of the SSM Framework Regulation (1) refers to national law regarding the time limit within which the ECB's decision regarding "significant" banks must be adopted and notified.

The practice followed by the ECB in verifying executive requirements has highlighted certain application difficulties of the national legislation in this matter (Circular 229 of 21.4.1999, Title II, Chapter 2, Section II, para. 2), which it is deemed appropriate to overcome. In particular, the need has emerged to extend the time available to the Supervisory Authority for the assessment—which now must also include the review by the ECB of the evaluations conducted by local Joint Supervisory Teams—as well as to define more comprehensively the different phases of the verification, to be conducted in compliance with the principles established by Law No. 241 of 1990.

As is well known, the entire discipline regarding the requirements and suitability criteria for bank executives will be subject to revision with the issuance of a decree by the Minister of Economy and Finance, which, pursuant to the new text of Article 26 of the Banking Act (TUB), is tasked with regulating the matter. The Bank of Italy is entrusted with the task of defining in its own provisions the methods and timelines for the evaluation.

Pending the adoption of the ministerial decree, which will necessitate a comprehensive reorganization of the Bank of Italy's provisions in this area, this measure proceeds to make some modifications to the procedure for evaluating the requirements of executives regulated by Circular No. 229, in order to coordinate it with the operational needs mentioned above.

It is therefore ordered that the sixth paragraph of Title II, Chapter 2, Section II, para. 2 of Circular No. 229 be replaced by the following:

"A copy of the meeting minutes must be transmitted to the Bank of Italy within thirty days. The Bank of Italy reserves the right, in cases where it deems it appropriate, to request the presentation of documentation proving the possession of the requirements and the absence of disqualifying situations. Within 120 days from receipt of the minutes, the Bank of Italy may initiate, where the conditions are met, an ex officio procedure to pronounce disqualification pursuant to Article 26 of the Consolidated Banking Act (T.U.); such procedure shall conclude within 30 days. The Bank of Italy may communicate the positive outcome of the conducted evaluation, even before the expiration of the term for the possible initiation of the disqualification procedure."

(1) Regulation (EU) No 468/2014 of the European Central Bank of 16 April 2014 establishing the framework for cooperation within the Single Supervisory Mechanism between the European Central Bank and national competent authorities and with national designated authorities.

For the regulation of the administrative procedure for disqualification and for the identification of the responsible organizational unit, reference is made to the Bank of Italy measure of 25 June 2008 (2), and subsequent modifications and additions.

It is recalled that, for executives of banks considered "significant" within the SSM (3), the verification of requirements is carried out by the ECB in accordance with the procedural rules provided for under Part III, Title 2, of the SSM Framework Regulation, and with the discipline regarding the evaluation of professional and honorability requirements provided for under Part VI, Title 2, of the same Regulation.

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The procedural modifications introduced by this measure apply to verifications concerning deliberations of the competent corporate bodies transmitted starting from the fifteenth day following the day of publication of this measure in the Official Gazette.

This regulation has not been subjected to public consultation and regulatory impact analysis because the modifications, being urgent and of limited scope, are confined to adjustments of the rules on the administrative procedure of the Bank of Italy pursuant to Law No. 241/90, to which the Bank of Italy Regulation on the issuance of supervisory normative acts is not applicable (4).

Rome, 1 December 2015
THE GOVERNOR
Ignazio Visco

(2) "Regulation providing for the identification of the time limits and organizational units responsible for administrative procedures within the competence of the Bank of Italy related to the exercise of supervisory functions in the banking and financial sector, pursuant to Articles 2 and 4 of Law 7 August 1990, No. 241, and subsequent amendments."

(3) Article 6, paragraph 4, of Council Regulation (EU) No 1024/2013 of 15 October 2013, attributing specific tasks to the European Central Bank regarding prudential supervision policies of credit institutions.

(4) Cf. Article 1, paragraph 4, fifth indented paragraph, of the measure of 24 March 2010 ("Regulation providing for the discipline of the adoption of acts of a normative or general content by the Bank of Italy in the exercise of banking and financial supervisory functions, pursuant to Article 23 of Law 28 December 2005, No. 262").