Premier Matteo Renzi on Friday
called for an urgent reform of the Italian banking system after
last month's controversial rescue of four crisis-hit banks saw
many bondholders bereft of their savings - one of whom committed
suicide.
As the Bank of Italy said it had done and would do its
utmost and had specifically warned against issuing the high-risk
'subordinated' bonds involved, the European Commission issued
another diktat against State aid in the easement package the
government is set to put in the 2016 budget, but approved the
idea of a court of arbitration to be set up by bourse regulator
Consob.
Economy Minister Pier Carlo Padoan said the government was
readying a package with the contribution of the banking system
that would be compatible with EU rules.
The victims of the case appealed to Renzi and the head of
Italy's largest trade union decried the lack of banking controls
evident despite the 2008 financial crisis.
Prosecutors in Civitavecchia meanwhile seized bank
documents in the case of the suicide, 68-year-old pensioner
Luigi D'Angelo.
Renzi said "credit system reform is more urgent than ever,
as we saw (recently) and in the past year with the popolari
(cooperative banks) reform".
Renzi's cabinet in January approved "historic" measures
giving the country's biggest 10 cooperative, or 'popolari' banks
18 months to change their ownership structures.
Bank of Italy (BoI) Senior Deputy Governor Salvatore Rossi
said the central bank called for a ban on the sale of
subordinate bonds to private individuals, commenting in the wake
of the government's November 22 decree to save the four
struggling banks in which a reported more than 100,000 account
holders who had purchased such bonds lost money.
"The truth is that Bank of Italy Governor Ignazio Visco,
before all this came out, asked to prohibit the sale of
subordinated bonds to bank branches, so that only institutional
investors could buy them and not simple depositors," Rossi said
in an interview with Italian daily Corriere della Sera.
"We can't ban the sale of this or that product. We don't
have such ample powers. And I remind you that supervision of
investor solicitation is the job of another authority," Rossi
said.
"I'd like to avoid the usual Italy-against-Europe game, but
it's undeniable that there was a difference of views between
Italian authorities - the government first of all but also us -
and Brussels, or rather the Directorate General and the
competition (authority), and that is what pushed us to follow
the now-criticised road that brought about the saving of Banca
(Banca) Marche, CariFe, CariChieti and (Banca) Etruria," Rossi
said.
"The results of supervisory activity must be measured
across the entire system. In these past seven years, first of
financial crisis, then of sovereign debt and economic crisis,
the number and size of bank crises in Italy have been a fraction
of those in Spain, Germany, France and the Netherlands".
The subordinate bonds sold by the four banks - prompting
one to commit suicide after losing his life savings - are
regarded as high-risk financial products that should normally go
to savvy institutional investors and not to inexperienced small
savers looking for safe instruments to place their money in.
Any easement for bereft investors in four rescued banks
cannot be made directly by the State, EU sources said Friday as
the government was set to frame its budget measure to help
shareholders and bondholders in Banca Marche, Banca Etruria,
CariFe and CariChieti.
The failure of a bank and the ensuing loss, for example, of
an apartment by stricken investors cannot be considered a
humanitarian crisis such as those caused by floods or other
natural disasters, the sources said on the government's mooted
humanitarian package for investors.
The European Commission "supports the intentions of the
Italian government to allow savers to ask for compensation from
banks for potential irregular sales of bonds and to take
inspiration from the past experience of other EU countries with
similar situations," a spokesman said on the idea of arbitration
by bourse authority Consob.
The EC "continues to be in close and constructive contact
with Italian authorities on their plans" to safeguard investors
in the four rescued banks, the spokesman said.
A group representing the account holders who lost money as
a result of the November 22 decree to save the four struggling
banks appealed directly to Renzi to hear their concerns.
"We expect the premier to at least receive a delegation so
he can hear the distress of many of us," said Letizia
Giorgianni, spokeswoman for the group 'Victims of the
Save-the-Banks'.
Florence police denied the group's request to hold a
demonstration in front of the Leopolda former train station in
Florence on Sunday - the venue for Renzi's annual three-day
political brainstorming event - for security reasons, moving it
to a nearby square instead.
The group said it wants to demonstrate "in the heart of
Renzi's Italy, right there where the Renzi idea of Italy and
government originated", and will move ahead with the
demonstration in the approved location in Piazzale della Porta
al Prato.
The leader of Italy's biggest and most leftwing trade
union, Susanna Camusso of CGIL, railed against a lack of
regulations following the 2008 financial crisis.
"The promise that the world made to itself in 2008, that
there would never again be toxic finance, derivatives,
non-transparent and ungoverned finance, didn't translate into
regulations or constraints," Camusso said, commenting on the
investors' plight.
"Today we're continuing to pay the consequences of a world
that financialized itself without rules", said Camusso.
Police seized documents from Banca Etruria in connection
with D'Angelo's suicide.
Prosecutors said they would be questioning bank officials.
D'Angelo hanged himself November 28 after losing his life
savings on subordinated bonds in the crisis-hit Tuscan lender.
The Bank of Italy is assessing the case "with maximum
commitment, doing the best and sure that we have done the best,"
Governor Ignazio Visco said.
Visco said the central bank would "report in all relevant
fora, with all necessary details" on the case.
The economy ministry said that the 'save banks' decree
"made safe the savings of around one million current account
holders and bondholders to the tune of around 12 billion euros,"
plus the jobs of 6,000 staff and 1,000 ancillary workers.
The ministry said the alternative to the decree "would
have been the liquidation" of the four banks concerned.
"In this case the procedure would have entailed the sale
of all assets and the distribution of the proceeds", with a
higher impact and also the reimbursement of other credits to the
tune of more than 10 billion euros.
The ministry said almost half, or 340 million, of the 768
million in subordinated bonds cancelled by the rescue of the
four banks was held by 10,500 retail savers.
The remainder was sold to institutional investors who may
have put them onto the secondary market.
Economy Minister Pier Carlo Padoan said the government
"means to give a response".
He said "we are preparing a norm that provides for the
creation of a fund with the contribution of banks".
The measure would be introduced via an amendment to the
2016 budget and the exact criteria would be established in due
course, the minister said.
Padoan said "you cannot rule out that the four (rescued)
banks sold subordinated bonds to people who presented a risk
profile incompatible with the nature of these bonds, but this is
what should be verified with the analysis of each individual
position".
Padoan said the government "deems it possible to map out an
intervention compatible with the EU discipline on State aid" in
compensating the bereft bondholders of the four rescued banks.
He said "assessments are ongoing with the European
Commission".
Padoan said "a saver who is little or poorly informed is the
potential victim of abuses.
"We must increase information and the capacity of savers to
assess things in order to reduce the informational asymmetries
and the risk of abuse".
He said these were some of the "lessons" to be learned from
the case of holders of subordinate bonds whose savings went up
in smoke when the four banks were rescued.
Padoan said that "seven years from the start of the crisis
the Italian banking system has stayed on its feet and has
strengthened itself in many points without using even one euro
of the 1.1 trillion euros spent by others in Europe to save
their banks".
Padoan said "complaining about the rules once they have
come into force makes no sense".
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