Cooperative credit banks: public consultation on new supervisory regulations

The Bank of Italy has opened a public consultation on new supervisory regulations for cooperative credit banks (BCC). Remarks, comments and proposals can be sent by 10 November 2017.

The new regulations will ensure that the specific rules applying to individual BCCs are consistent with those applying to cooperative banking groups as set out in the Consolidated Banking Law and in the implementing regulations issued by the Bank of Italy. At the same time the new regulations ensure that the local nature of these banks and their traditional role in providing mutual assistance are preserved.

The new regulations effect a number of changes: they introduce prudential rules on equity finance, a means of rapid recapitalization; they relax the criteria for determining geographical reach, thus making it easier for nascent cooperative banking groups to set up a well-organized branch network; they change the requirement to operate primarily with members (which also applies to the mutual assistance aspect of BCCs) to allow for the new and substantial role of intragroup exposures in liquidity management and mutual cross-guarantee schemes; and they update and change the rules on the activities that banks may engage in and on permissible shareholdings, extending the range of activities of BCCs to reflect the enhanced risk control capabilities of the group structures.

The new regulations will provide all the entities involved in establishing cooperative banking groups with a clear, definite and complete regulatory framework. This will help them to make the most appropriate business and organizational decisions to meet the capital, governance, internal control, efficiency and competitiveness requirements set for cooperative credit banks.