Italy 1 entry 1 1 Licensing authority

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Italy 1 entry 1 1 Licensing authority Powered By Docstoc
1.1 Licensing authority                                                                           Bank of Italy
1.2 Number of banks                                                                               921
1.3 Minimum capital entry requirement                                                             Euro 6.3
1.4 Is information on source of funds for capital required?                                       yes

1.5 Are the sources of funds to be used as capital verified by                                    yes
1.5.1 Are law enforcement authorities consulted?                                                  yes
1.6 Can assets other than cash/govt. securities be used to                                        yes
increase capital?
1.7 Can borrowed funds be used?                                                                   no
1.8 Legal submissions required for banking license:              1.8.1 Draft by-laws              yes
                                                                 1.8.2 Intended organization      yes
                                                                 1.8.3 First 3-year financial     yes
                                                                 1.8.4 Financial information on   yes
                                                                 1.8.5 Background/experience      yes
                                                                 of future directors

                                                                 1.8.6 Background/experience      yes
                                                                 of future managers

                                                                 1.8.7 Sources of funds in        yes
                                                                 capitalization of new bank
                                                                 1.8.8 Intended market            yes
                                                                 differentiation of new bank
1.9 Number of domestic applications for banking licenses                                          156

1.9.1 Number denied                                                                               42
1.10 Number of foreign applications for banking licenses                                          8
1.10.1 Number denied                                                                              0
1.11 Basis for denial of appilications                           1.11.1 Capital amount/quality    yes

                                                                 1.11.2 Banking skills            yes
                                                                 1.11.3 Reputation                yes
                                                                 1.11.4 Incomplete application    yes

2.1 Is there a maximum percentage of capital that can be                                          no
owned by single owner?
2.1.1 If yes, what is it?
2.2 Can related parties own capital in a bank?                                                    yes
2.2.1 If yes, what is the maximum percentage?                                                     none
2.3 Regulatory restrictiveness of ownership by nonfinancial                                       restricted
firms of banks
2.4 Fraction of capital in 10 largest banks owned by                                              a negligible fraction
2.5 Can non-bank financial firms own shares in banks?                                             yes
2.5.1 What are the limits?                                                                        none
2.6 What is the 5-bank concentration ratio (%)?                                                   25.1% (Mar, '99)
3.1 Minimum capital-asset ratio requirement (%)                                               8
3.1.1 Is it risk-weighted in line with Basle guidelines?                                      yes
3.2 Does the ratio vary with a bank's credit risk?                                            no
3.3 Does the ratio vary with market risk?                                                     no
3.4 Actual risk-adjusted capital ratio (%)                                                    13.4 (dec, 1998)
3.5 Is subordinated debt allowable (required) as part of                                      yes
3.6 What fraction of revaluation gains is allowed as part of                                  35%
3.7 Percentage of banking system's assets in banks that are                                   17
50% or more government owned
3.8 Percentage of banking system's assets in banks that are                                   5 (dec 1998)
50% or more foreign owned
3.9 Before minimum capital adequacy is determined, which        3.9.1 Market value of loan    no
items are deducted from capital                                 losses
                                                                3.9.2 Unrealized securities   yes
                                                                3.9.3 Unrealized foreign      yes; for trading portfolio
                                                                exchange losses
4.1 Securities                                                                                unrestricted
4.2 Insurance                                                                                 permitted
4.3 Real estate                                                                               prohibited
4.4 Regulatory restrictiveness of bank ownership of                                           restricted
nonfinancial firms
5 & 6 -audit,management,org
5.1 Is an external audit compulsory?                                                          no
5.2 Are there specific requirements for the extent of audit ?                                 no

5.3 Are auditors licensed or certified?                                                       yes
5.4 Is auditor's report given to supervisory agency?                                          no
5.5 Can supervisors meet external auditors to discuss report                                  no
without bank approval?
5.6 Are auditors legally required to report misconduct by                                     yes
managers/directors to supervisory agency?
5.7 Can legal action against external auditors be taken by                                    no
supervisor for negligence?
5.8 Has legal action been taken against an auditor in last 5
6.1 Can supervisors force banks to change internal                                            yes
organizational structure?
6.2 Has this power been utilized in last 5 years?                                             not reported
7.1 Are there guidelines for asset diversification?                                           no
7.2 Are banks prohibited from making loans abroad?                                            no
7.3 Minimum liquidity requirement (%)                                                         None
7.4 What interest is paid on reserves?
Minimum reserve requirement (%)                                                               2%
How is reserve requiremement renumerated                                                      at the average rate for the
                                                                                              refinancing operations carried
                                                                                              out by the European System of
                                                                                              Central Banks during the
                                                                                              maintenance period

7.5 What assets satisfy liquidity or reserve requirements?
8.1 Is there an explicit deposit insurance scheme?                                   yes; Interbank Fund for
                                                                                     protection of deposits
                                                                                     comprising all Italian banks
                                                                                     except mutual banks; and
                                                                                     Guarantee Fund for Depositors
                                                                                     for mutual banks
8.1.1 Is it funded by the government, banks or both?                                 banks
8.1.2 Ratio of accummulated funds to total bank assets                               The two existing deposit
                                                                                     protection schemes do not
                                                                                     have assets of their own;
                                                                                     where they intervene, each
                                                                                     participating financial
                                                                                     institution has to contribute on
                                                                                     the basis of its shares of
                                                                                     deposits and risk assets
8.1.3 Insurance limit per account                                                    This limit is per person and not
                                                                                     per account
8.1.4 Is there a limit per person?                                                   yes Amount of limit                                                              Euro 103,291.48
8.1.5 Does deposit insurance authority make the decision to                          yes
intervene a bank?
8.1.6 If no, who does?
8.1.7 If yes, does the deposit insurance authority have the                          yes
legal power to intervene/takeover a troubled (not insolvent)
8.2 As a share of total assets, value of denominated debt                            30% for mutual banks; 40% for
liabilities not covered by explict/implicit savings protection                       all other Italian banks (as of
scheme?                                                                              6/1998)
8.3 Number of banks merged/closed (as part of failure                                24
resolution) in last 5 years
8.4 Were depositors wholly compensated the last time a bank                          yes
8.4.1 Average time to pay depositors in full                                         9 months
8.4.2 Longest that depositors waited in last 5 years                                 20 months
8.5 Were any deposits that were not covered at the time of                           yes
failure compensated when bank failed?
8.6 Can deposit insurance agency take legal action against                           no
bank directors/officials?
8.7 Has the deposit insurance agency ever taken any legal                            no
action against bank directors/officials?
9.1 Is there a formal definition of "non-performing loan"?                           yes
9.1.1 If yes, what is it?                                                            Non-performing loans include
                                                                                     bad debts; substandard loans,
                                                                                     loans being restructured, and
                                                                                     restructured loans where each
                                                                                     is classified based on various
                                                                                     criteria. Each bank decides
                                                                                     when a loan should be
                                                                                     classified in arrears.

9.2 Classification of loans in arrears:                          9.2.1 Substandard
                                                                 9.2.2 Doubtful
                                                                 9.2.3 Loss
9.3 Minimum required provisioning of loans as they become:       9.3.1 substandard
                                                                    9.3.2 doubtful
                                                                    9.3.3 loss
9.4 Other classification systems                                                     Bad debts are exposures vis-à-
                                                                                     vis persons that are insolvent
                                                                                     regardless of the bank's
                                                                                     forecast of loss. Substandard
                                                                                     loans are based on: a
                                                                                     subjective criterion which
                                                                                     implies that the debtor's
                                                                                     difficulty in performing his
                                                                                     contractual obligations is
                                                                                     considered to be temporary
                                                                                     and it is expected to be solved
                                                                                     in a reasonable amount of
                                                                                     time, and an objective criterion
                                                                                     which refers to the number and
                                                                                     size of the overdue
                                                                                     instalments. The latter criterion
                                                                                     is applied only when the loan
                                                                                     has not been classified as
                                                                                     substandard. Loan being
                                                                                     restructure are those for which
                                                                                     the decision to grant the
                                                                                     restructuring is still pending
                                                                                     after one year from the request
                                                                                     for restructuring. Restructured
                                                                                     loans are those being
                                                                                     modefied in their maturity and
                                                                                     rescheduled at a subsidized
                                                                                     rate. Minimum provisions are
                                                                                     required only for country risk

9.5 Ratio of non-performing loans to total assets (%)                                0.119 (Dec 98)
9.6 If one loan is non-performing, are other loans of a multiple-                    yes
loan customer classified as non-performing?
10.1 Does income statement contain accrued but unpaid                                yes
interest/principal while loan is performing?
10.1.1 Does income statement contain accrued but unpaid                              yes; only to the extent that the
interest/principal while loan is non-performing?                                     bank judges that the overdue
                                                                                     interests can be collected

10.2 Number of days in arrears after which interest income                           not applicable
cease to accrue
10.3 Are consolidated accounts covering bank and any non-                            yes
bank financial subsidiaries required?
10.4 Are off-balance sheet items disclosed to supervisors?                           yes

10.4.1 Are off-balance sheet items disclosed to public?                              yes
10.5 Must banks disclose risk management procedures to                               yes
10.6 Are directors legally liable for erroneous/misleading                           yes
10.6.1 Have penalties been enforced?                                                 yes
10.7 Do regulations require credit ratings for commercial                                            no
10.7.1 What percentage of top ten banks is rated by
international credit rating agencies?
10.7.2 What percentage of the top ten banks are rated by
domestic credit rating agencies?
10.7.3 Which bank activities are rated?                  bonds                     not reported
                                                         commercial paper          not reported
                                                         other                     not reported
11.1 Are there any mechanisms of cease-desist type orders                                            no
whose infraction leads to automatic imposition of civil & penal
sanctions on banks directors & managers?
11.2 Can the supervisory agency order directors/management                                           no
to constitute provisions to cover actual/potential losses?

11.3 Can the supervisory agency suspend director's decision       11.3.1 dividends                   no
to distribute:
                                                                  11.3.2 bonuses                     no
                                                                  11.3.3 management fees             no
11.4 Any such actions taken in last 5 years?
11.5 Which laws address bank insolvency?                                                             The Banking Code
11.6 Can the supervisory agency supercede bank shareholder                                           no
rights and declare bank insolvent?
11.7 Does banking law allow supervisoy agency to suspend                                             yes
some or all ownership rights of a problem bank?

11.8 Does the law establish pre-determined levels of solvency                                        no
deterioration which forces automatic actions such as
11.9 Regarding bank restructuring & reorganization, can           11.9.1 supercede shareholder yes
supervisory agency or any other govt. agency do the               rights
                                                                  11.9.2 remove and replace          yes
                                                                  11.9.3 remove and replace          no
                                                                  11.9.4 forbear certain             yes
                                                                  prudential regulations
                                                                  11.9.5 insure liabilities beyond   no
                                                                  any explicit deposit insurance
11.10 Number of banks closed in last 5 years                                                         24
11.10.1 Percentage of total bank assets accounted for by                                             0.006 (as of dec 98)
these banks
12.1 Bank Supervision Authority                                                                      Bank of Italy
12.1.1 Is there more than one supervisory body?                                                      no
12.2 To whom are supervisors accountable?                                                            To the administrative courts
12.2.1 How is head of supervisory agency/other directors                                             The Governor is appointed
appointed?                                                                                           with a resolution of the Bank of
                                                                                                     Italy's Executive Board , with
                                                                                                     the agreement of the President
                                                                                                     of the Republic and the Prime
12.2.2 How is head of supervisory agency/other directors        The Governor can only be
removed?                                                        removed with a resolution of
                                                                the Bank of Italy's Executive
                                                                Board , with the agreement of
                                                                the President of the Republic
                                                                and the Prime Minister

12.3 Any important differences between expectations from        yes
supervisory agency and what is mandated by law?

12.4 Total number of professional bank supervisors              400
 12.4.1 Number of professional bank supervisors per             no fixed number
12.5 Numbe of onsite examinations per bank in last 5 years      1

12.6 Total budget for supervision                               Not reported
12.7 Frequency of onsite inspections conducted in large &       every 5 years
medium size banks (annually=1; every two years =2)
12.8 Average tenure of a supervisor (years)
12.9 frequency of supervisors employed by banking industry      2
subsequent to retirement (never=0, rarely=1, occasionally=2;
12.10 Must infraction of any prudential regulation found by a   yes
supervisor be reported?
12.11 Any mandatory actions in these cases?                     yes
12.12 Who authorizes exceptions to such actions?                no exceptions
12.13 Number of exceptions granted last year                    Not applicable
12.14 Are supervisors legally liable for their actions?         yes

Description: Bad Credit Loans with No Bank Account document sample