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Crisis management procedures

The procedures for managing bank and banking group crises are governed by Title IV, Chapters I and II of Legislative Decree 385/1993 and subsequent amendments (the Consolidated Law on Banking).

The special rules applicable to banks and banking groups have as their primary objective the protection of savings in view of, amongst other things, the strong social impact of crises on the various individuals concerned: depositors, users of investment services, other creditors, employees, shareholders.

The rules envisage different crisis management procedures, depending on how critical the corporate situation is: the gravity of the capital losses, irregularities or regulatory and administrative violations. Only the provisions set out in the Consolidated Law on Banking apply.
If there are signs that the crisis can be resolved, the bank can be placed under special administration. This is approved by decree of the Minister for the Economy and Finance, issued following a proposal to this effect by the Bank of Italy, whose task it is to nominate the special bodies. The objective of this procedure is to assess the corporate situation and propose solutions in the interest of the depositors.

If the situation is extremely urgent, and the conditions for placing the bank under special administration have been met, the Bank of Italy can nominate one or more commissioners who assume the powers of administration of the bank for a maximum of two months ("temporary management").

If, instead, the crisis appears to be irreversible, the bank is placed under compulsory administrative liquidation, by decree of the Minister for the Economy and Finance, issued following a proposal to this effect by the Bank of Italy. Also in this instance the Bank of Italy is responsible for appointing the liquidating bodies.

The bankruptcy law finds application, where compatible, exclusively for the matters not expressly provided for by the Consolidated Law on Banking. In cases of compulsory administrative liquidation, the deposit guarantee systems, to which Italian banks are obliged to adhere, reimburse up to a maximum of €100,000 per depositor.

The special bodies and liquidators operate under the control of the Bank of Italy, which also has the power to authorize other emergency measures.
The procedures for EU banks are governed by the legislation of the home state and produce their effects in national law without further formality.