How can international banks operate in your jurisdiction?
International banks, both EU banks and non-EU banks, can operate in Italy by establishing a branch or by providing services (without establishing a branch).
As far as EU banks are concerned, operation in Italy is subject to a notice from the Home Country regulator to the Bank of Italy. An EU-bank branch may commence its business activities in Italy 2 months after the Bank of Italy’s receipt of the above notice.
If necessary, the Bank of Italy and CONSOB (the public authority responsible for regulating Italian financial markets) may indicate further conditions, on the basis of general interest considerations (for example supervisory requirements, consumer law, transparency rules, anti-money laundering and anti-terrorist financing provisions), under which those activities may be carried out through a branch in Italy.
A specific authorization from the Bank of Italy is necessary where the EU bank branch intends to carry out activities other than those subject to mutual recognition under the CRD IV. The relevant authorisation procedure takes up to 120 days. The Bank of Italy will verify whether Italian banks in Italy carry out similar business and require evidence that the following conditions are met:
- the banking activity is actually carried out by the bank in its home country; and
- the Home Country regulator has been informed of the bank’s intention to carry out such activity in Italy through the branch.
As far as non-EU banks are concerned, operation in Italy through a branch needs to be authorised by the Bank of Italy. In particular, the Bank of Italy may issue the authorisation after consultation with the Ministry for Foreign Affairs (Ministero degli affari esteri), no later than 120 days from the receipt of the relevant application.
The establishment of a non-EU bank branch may be authorised if the following conditions are met:
- the amount of paid-up capital of the non-EU bank is not less than the amount indicated by the Bank of Italy (currently equal to Euro 10 million);
- an initial plan of activities, including business details, internal supervisory structure and capital adequacy evaluation is submitted;
- the administrative, management and supervisory senior staff, meets the professional competence, integrity, fairness and independence requirements; and
- the Home Country regulator certifies the capital adequacy of the bank and the proper internal management, administrative and accounting structures of both the bank and its banking group.
In the event that services are to be provided by a non-EU bank in Italy without establishing a branch, the relevant authorization may be issued by the Bank of Italy upon satisfaction of the conditions under (b) and (d) above. The Bank of Italy is entitled to request additional documents or data if necessary.
In case of investment services to be carried out on the financial market, authorisation is given after the Bank of Italy has sent a notice to CONSOB and CONSOB has given its opinion on this.
In addition a foreign bank may establish a subsidiary in Italy. In such case, the foreign bank will have to apply to the Bank of Italy for a bank license and will have to comply with the same rules and procedures as apply to Italian banks.
What considerations does your regulator take into account when an international bank wishes to open a branch in your jurisdiction?
When a EU bank wishes to carry out activities other than those subject to mutual recognition, the Bank of Italy, in addition to the conditions listed under paragraph 1 above, takes into account whether a similar business can be conducted by other authorised banks in Italy.
As far as the authorization process for non-EU- banks is concerned, the Bank of Italy mainly takes into account the reciprocal conditions criteria based on which an Italian bank carry out the same business in the home country of a non-EU bank. Furthermore, it verifies whether:
- it can effectively monitor and supervise the bank and its banking group;
- the Home Country provides for adequate supervisory control regulations; and
- an exchange of information agreement is in place with the Home Country regulator authority.
in your supervisor’s determination of a branch?
Resolution is likely to be an important factor in the near future. Rules and procedures for recovery and resolution are still incomplete and under discussion in Italy, although we expect they will be implemented by the end of the year.
Legislative Decree no.72 of 12 May 2015 has designated the Bank of Italy as the Italian authority responsible for resolution.
What are the regulatory reporting requirements placed on branches?
Once authorized to operate in Italy, branches of international banks must be registered at the Register of the Banks and Financial Intermediaries (Albo delle Banche) kept by the Bank of Italy. Any relevant modification to the details listed in the Register (such as, for example, name, registered office in Italy and abroad, listing on any relevant stock exchange and details of any merger) must be promptly updated.
Furthermore, they are required to report to the Bank of Italy periodically for supervisory purposes to send it a copy of their balance sheet and all relevant details regarding the people responsible for the auditing of their balance sheet.
Do you allow dual licenses whereby a banking group may hold a banking license through the branch and have a subsidiary also holding a banking license?
Foreign banks may operate in Italy through (i) a subsidiary (filiazione di banca estera) (i.e., an Italian bank directly or indirectly owned by a foreign bank, or by an individual and/or by a company owning such foreign bank) and/or (ii) through a branch (succursale) (i.e. a foreign entity with registered office abroad).
Although Italian law does not restrict a holding of a banking group from controlling an Italian subsidiary and/or maintaining a branch, the Bank of Italy is entitled to asses and consider whether a banking group’s structure could impair the effectiveness of its monitoring and supervision activities.
Where can I find further information?
Further information on the operation of internationals banks in Italy can be found at the following links: