Italy: Measures to Foster Banking System and Promote Investment

(Feb. 10, 2015) Italy’s cabinet has approved new measures, contained in Legislative Decree No. 3 (D.L. No. 3), aimed at bolstering the national economy, in particular the banking and investment sectors. (Legislative Decree No. 3 of January 24, 2015, Urgent Measures for the Banking System and Investment, GAZETTA UFFICIALE (G. U.) No. 29, NORMATTIVA (in Italian).) While the measures became effective January 25, 2015, they must be approved by the legislature within 60 days.

Banking Provisions

D.L. No. 3 amends Legislative Decree No. 385 of September 1, 1993, the Consolidated Law Concerning Banks and Credit. (D.L. No. 385, G. U. No. 230, NORMATTIVA (in Italian).) It requires large banks that are currently classified as cooperative societies, which are subject to particular regulatory requirements, to convert to stock corporations. It establishes that the exercise of banking activities by cooperative societies is reserved to credit unions and banks of cooperative credit. The amendments impose an upper limit of €8 million (about US$9.1 million) on the active assets of credit unions. (D.L. No. 3 art. 1(1)(b)(1).) If that limit is exceeded, the credit union must reduce its assets within a year, transform itself into a stock corporation, or proceed to liquidation. (Id.)

New measures allowing for the portability of checking accounts out of Italy are included. Specifically, banking institutions and providers of payment services must follow EU directives, without charging customers fees and portability expenses. (Id. art. 2(1); Directive 2014/92/EU of the European Parliament and of the Council of 23 July 2014 on the Comparability of Fees Related to Payment Accounts, Payment Account Switching and Access to Payment Accounts with Basic Features, EUR-LEX.) Banking institutions and payment service entities must compensate customers in cases of undue delay. (D.L. No. 3, art. 2(2).)

Foreign Commerce Provisions

To foster the export financing activities of the Italian Insurance Agency for Foreign Commerce, D.L. No. 3 authorizes the Agency to provide direct loans to its customers, in accordance with international, European, and Italian legislation. (Id. art. 3(1).) Additional requirements are added for the formation of small and medium enterprises, among them residence requirements and the presence of a manufacturing plant or a subsidiary in Italy. (Id. art. 4(1)(a).) In addition, D.L. No. 3 requires that a minimum percentage of spending be devoted to research and development, calculated over the total cost and value of the enterprise’s production output; it also requires a set percentage of the workforce be employed as staff in innovative projects. (Id. art. 4(1)(e)(1) & (2).)

The legislation also amends the taxation of income from immovable assets and the tax credit established for the purchase of new capital goods. (Id. art. 5(1).) The law eliminates the requirement that non-resident foreign institutional investors be registered as taxpayers in Italy in order to enjoy exemptions on the taxation of their investment income, as long as the investors are subject to supervision in the foreign country where they are established. (Id. art. 6(1).)

Creation of New Corporate Funding Mechanism

D.L. No. 3 also creates a new entity, the Service Fund for the Capitalization of Enterprises (Fondo di servizio per la patrimonializzazione delle imprese), for the capitalization and restructuring of enterprises based in Italy. (Id. art. 7(1).) The Fund will assist companies based in Italy that, despite having temporary capital or financial imbalances, have adequate prospects for growth from an industrial and market viewpoint. (Id.)

The capital of the Fund is to be contributed by institutional and professional investors, and the Fund may also issue shares. (Id. art. 7(3).) The Fund must seek to provide support to investors with diverse portfolios; such investors may also avail themselves of state guarantees for their projects. (Id.) The state will receive a fee as well as a share in the profits for the provision of its guarantee. (Id.. art. 7(4).) The executive branch of Italy’s government is to set the maximum amount of the government guarantees, as well as the criteria and procedures for granting them; these must then be approved by the pertinent organs of the European Union. (Id. art. 7(7).)