The Bank of Italy, in exercising its organizational autonomy, has put in place suitable separation mechanisms between the functions connected with crisis management and resolution and the other functions it performs so as to ensure its operational independence and has instituted forms of cooperation and coordination between the corresponding units.
A special unit, the Resolution and Crisis Management Unit, has been formed to carry out the tasks assigned to the Bank of Italy in its capacity as national resolution authority and as supervisory authority for deposit guarantee schemes; specifically, the Unit performs the activities connected with resolution plans and the application of resolution measures, it liaises with national, European and international institutions and with financing mechanisms with reference to those matters for which it is responsible, and it manages the liquidation proceedings regarding banks and financial intermediaries.
The Resolution and Crisis Management Unit collaborates and interacts with other Bank of Italy structures each within their respective powers; in particular, it collaborates with the directorates of the Directorate General for Financial Supervision and Regulation pursuant to a special provision (only in Italian). To ensure operational independence and to avoid conflicts of interest between the resolution and the supervisory functions, the Resolution and Crisis Management Unit reports directly to the Governing Board, which is responsible for approving measures of external significance regarding the public functions assigned to the Bank of Italy by law in order to perform its institutional tasks. The Governing Board relies on the administrative support of the Resolution and Crisis Management Unit and the advice of an internal advisory body, the Advisory Committee on Resolution and Crisis Management, composed of the Bank's General Counsel (Chair), the Head of the Directorate General for Financial Supervision and Regulation and the Head of the Resolution and Crisis Management Unit. This Committee formulates opinions on the proposals for decisions regarding resolution and crisis management to be submitted to the Governing Board and facilitates information exchange and close collaboration between the resolution and supervisory functions in the preparation, planning and application of resolution decisions.
The Bank of Italy's activities within the Single Resolution Mechanism for the resolution of significant and less significant intermediaries with cross-border operations
The collaboration between the Single Resolution Board and the national resolution authorities is governed by the Cooperation Framework. The Bank of Italy helps draft resolution plans and set out the criteria for managing crisis situations involving Italian banks that fall within the scope of the Single Resolution Board by taking part - through the staff of the Resolution and Crisis Management Unit - in internal resolution teams (IRTs), composed of personnel from the Single Resolution Board and the national resolution authorities that are relevant for the banking group in question.
The Bank of Italy participates as an observer in the resolution colleges (governed by Commission Delegated Regulation (EU) 2016/1075) established for the banks located in the countries covered by the Single Resolution Mechanism and having subsidiaries or branches deemed significant in one or more non-participating Member States or vice versa. The resolution colleges bring together the Single Resolution Committee and, for each country involved, the resolution authority and the supervisory authority for deposit guarantee schemes and the ministries of economy to discuss and agree upon the resolution plans.
The Bank of Italy takes part in: i) the executive sessions of the Single Resolution Board, with the possible inclusion of one or more of the national resolution authorities affected based on the subject of the decision; ii) the plenary sessions of the Single Resolution Board together with the other national resolution authorities that participate in the Single Resolution Mechanism.
The activities of the Bank of Italy regarding the resolution of less significant intermediaries
With regard to banks, banking groups and medium-sized and small securities investment firms (SIMs), the Bank of Italy in its capacity as the national resolution authority responsible for such intermediaries within the framework of the Single Resolution Mechanism: i) periodically drafts resolution plans and updates them; ii) determines the minimum requirement for own funds and other liabilities (MREL); iii) removes any impediments to resolvability for individual intermediaries/groups; iv) and implements the crisis management procedures. The implementation phase encompasses the activities regarding the transfer of bridge banks and assets, as well as the measures taken by assets management companies.
The Bank of Italy works with the Single Resolution Board in exercising its functions in accordance with the relevant legislation and the guidance deriving from the Cooperation Framework. In this context, the Bank of Italy notifies the Single Resolution Board of the actions taken with regard to the less significant intermediaries, submitting in advance, for the issuance of its opinion, the decisions to be take regarding them, such as, for example, approval of resolution plans, determination of the MREL, application of simplified obligations; it also promptly notifies the Single Resolution Board about intermediaries whose technical condition appears to have substantially deteriorated. In this way, the Single Resolution Board can verify uniform application among the Member States of the European legislation on bank resolution and, if need be, can take on the responsibility of a less significant institution, if such a decision is necessary to ensure the consistent application of the principles of the Single Resolution Mechanism.
The activities of the Bank of Italy regarding the Single Resolution Fund
The Bank of Italy collects the data needed to calculate the contributions to the Single Resolution Fund (SRF) and the corresponding financial resources, which it then transfers to the SRF. It also provides support to the Single Resolution Board in handling specific national cases and assists the intermediaries required to make contributions, in particular regarding the reporting of data and the subsequent quality control on the data submitted by the intermediaries.
The activities of the Bank of Italy regarding the National Resolution Fund
In 2015, the Bank of Italy - pursuant to Legislative Decree 180/2015 transposing the BRRD - established the National Resolution Fund (NRF), in order to provide the financial resources necessary to achieve the objectives of resolution procedures. More specifically, in 2015 the NRF - whose capital, separate from that of the Bank of Italy and any other capital managed by the Bank, is funded by contributions from Italian intermediaries - carried out a series of interventions to finance the resolution of four less significant banks. The NRF prepares an Annual Report that is published together with the Bank of Italy's annual accounts.
The activities of the Bank of Italy relating compulsory administrative liquidation proceedings and the withdrawal of authorisation.
Compulsory administrative liquidation is the special procedure under national law for managing irreversible crises of banks and is applied if a failure or risk of failure is ascertained, there are no market solutions and there is no public interest in placing the bank under resolution.
This procedure is ordered by decree of the Minister of Economy and Finance, upon proposal by the Bank of Italy which is responsible for initiating it, working with the supervisory function and with the Single Resolution Board in ensuring compliance with the reporting and notification requirements set down in the Cooperation Framework. The Bank of Italy has been given supervisory powers over liquidation proceedings; as part of this, the Bank is also responsible for appointing the liquidators and for authorizing the liquidators' primary acts.
In addition to banking intermediaries, compulsory administrative liquidation may also be applied to non-banking intermediaries governed by the Consolidated Law on Banking (EMIs, PIs and financial intermediaries included in the Single Register) and the Consolidated Law on Finance (SIMs, SGRs, SICAFs and SICAVs). There is a separate liquidation procedure for investments funds (compulsory liquidation), which is ordered by a decision of the court, with the Bank of Italy being entrusted the task of supervising the liquidation in accordance with the general rules for the liquidation of banking and financial intermediaries.
Finally, for non-banking intermediaries, national law offers an additional crisis management tool - withdrawal of authorization. It is ordered by the Bank of Italy and involves the dissolution of the intermediary and its exit from the market through a voluntary liquidation process; where, however, the conditions for an orderly voluntary liquidation are not met, the intermediary is placed under compulsory administrative liquidation.
The activities of the Bank of Italy regarding the supervision of deposit guarantee schemes
The transposition of Directive 2014/49/EU into national law led to a revision of procedures that the Bank of Italy is required to follow in its supervision of deposit guarantee schemes (DGSs). Specifically, the current regulatory framework assigns the Bank of Italy the role of the designated authority for supervising the DGSs operating in Italy (the Interbank Deposit Protection Fund and the Depositors' Guarantee Fund).
The deposit guarantee schemes are organized as private law consortiums; the Bank of Italy exercises over them the oversight powers provided for by the Consolidated Law on Banking, in accordance with EU law. The guarantee funds act with full autonomy in making decisions connected with the mandate granted them under national law, in particular concerning actions to be taken vis-à-vis their member banks.
In performing these tasks, the Bank of Italy, through the Resolution and Crisis Management Unit, supervises the national deposit guarantee schemes in accordance with the guidelines published by the European Banking Authority.
The Bank of Italy's supervisory powers include the right to access information (to collect the main data on the funds' financial and business positions) and to carry out inspections (to verify that the information they submit is accurate), and supervision of the performance of the functions attributed to the guarantee schemes. More specifically, the Bank of Italy recognizes guarantee schemes, approving their bylaws and internal models for calculating the contributions owed by the member banks, based on a risk-weighted methodology; it also oversees the choices made by the deposit protection schemes in their bylaws concerning whether or not contributions can be accepted also in the form of payment commitments and ensures that such commitments conform to the relevant guidelines. Finally, the Bank of Italy oversees the periodic stress tests performed by the DGSs to measure their capability to intervene.