Antonio Fazio: Update on the change in the control structure of some
Italian banking groups
Report by Mr Antonio Fazio, Governor of the Bank of Italy, to the Interministerial Committee
for Credit and Savings, Rome, 26 August 2005.
* * *
1. Introduction. Supervisory procedures and action in the case of transactions
involving the capital of banks
The controls on the ownership structures of banks contribute, together with the other
instruments of prudential supervision, to the pursuit of the objectives of sound and prudent
management of intermediaries and the stability, efficiency and competitiveness of the
banking and financial system (Article 5 of the Consolidated Law on Banking). Effective
performance of the controls has accompanied the international opening of the ownership of
Italian banks, which is also significant in comparison with other European countries. The
proportion of foreign-owned capital in the four major banking groups averages 16 per cent in
Italy, 7 per cent in Germany, 3 per cent in France and 2.6 per cent in Spain. In Italy
competition has increased; the range of services offered to customers has broadened; unit
operating costs have been reduced. This process is still under way. Under Community and
Italian law, the acquisition of shareholdings in banks above given thresholds, which start at 5
per cent, must be authorized by the Bank of Italy; moreover, holdings that allow the exercise
of control must always be authorized (Article 19 of the Consolidated Law on Banking).
All shareholders' agreements leading to the coordinated exercise of voting rights at a bank
must be notified to the Bank of Italy within five days. Voting rights that are the subject of
unreported agreements may not be exercised. The evaluations conducted by the Bank of
Italy are intended to prevent major shareholders from exercising their rights to the detriment
of the sound and prudent management of the bank. To this end the Bank of Italy takes into
account: (a) the characteristics of the parties intending to acquire the holdings; (b) the upper
limit of 15 per cent on industrial and commercial companies' holdings of a bank's capital and
(c) in the event of the acquisition of a controlling interest, the business plan pursued.
If the acquirer is a bank, the evaluation also looks at the operation's impact on the bank's
overall situation and organization and that of the entity created by the combination (Article 53
of the Consolidated Law on Banking). If the acquirer is an EU bank, Community law requires
prior consultation with the supervisory authority of its country of origin, which is responsible
for verifying its sound and prudent management. The sustainability of acquisitions is
evaluated with reference to prudential regulations, which are based on common international
principles; in this regard, capital adequacy with respect to the various forms of risk is of
fundamental importance.
In particular, the regulations state that banks' capital, in the composition employed for
supervisory purposes, must be equal to at least 8 per cent of their riskweighted assets.1
Banking groups are required to report their capital ratios to the Bank of Italy twice a year,
with reference to the situation on 30 June and 31 December of each year; these official
reports must be sent, respectively, by 25 October and 25 April following the reference date.
Compliance with the regulations is verified on the basis not only of statistical reports, but also
of information and documents acquired by the Bank of Italy as part of its administrative
activity and in the course of interviews with corporate officers. Supervisory inspections can
be conducted to obtain further information regarding the management of the bank and the
quality of the data transmitted.
Community law and supervisory instructions do not exclude the possibility of deviations from
regulatory requirements, but require that suitable measures be adopted promptly to restore
compliance with the capital ratio.
In the case of business combinations, the Bank of Italy examines the amount of capital
available as well as the plans for raising any additional funds that might be needed. The
evaluations are made on the basis of the latest balance sheet of the acquirer, audited, in the
case of listed banks, by a leading firm of independent auditors; these evaluations are
supplemented with information acquired in the course of ordinary supervisory activity and
with additional information, data and simulations obtained during meetings with corporate
officers or from other sources.
In general it is not economically advantageous, in the early stages of planning, for the bank
making the acquisition to obtain more funds than are necessary for ordinary operations, not
least in view of the substantial progress the capital market has made in recent years;
acquiring capital in advance would primarily affect the shareholders, by reducing the return
on their capital. The authorizations contain mandatory provisions to coordinate the making of
investments in shareholdings with the raising of capital.
In order to provide safety margins with respect to the minimum ratios prescribed by the
regulations, the Bank of Italy often requires contingency plans for raising further capital to be
drawn up, ready for implementation in case of need. The Bank of Italy performs a different
evaluation of mergers and acquisitions, entirely separate from the examination of the
prudential aspects, by virtue of the powers as antitrust authority for the banking sector
entrusted to it under Law 287/1990. I will not go into this aspect in detail because it has no
bearing on the facts that are the focus of attention today; in the case of the Banca Nazionale
del Lavoro, the opinion of the Antitrust Authority is pending.2
The procedures followed by the Bank of Italy in the conduct of its supervisory activity comply
with the provisions of Law 241/1990, as amended, which regulate administrative
proceedings, making a distinction between the examination stage and the decision-making
stage.
In the case of business combinations, the Bank of Italy examines the amount of capital
available as well as the plans for raising any additional funds that might be needed. The
evaluations are made on the basis of the latest balance sheet of the acquirer, audited, in the
case of listed banks, by a leading firm of independent auditors; these evaluations are
supplemented with information acquired in the course of ordinary supervisory activity and
with additional information, data and simulations obtained during meetings with corporate
officers or from other sources.
In general it is not economically advantageous, in the early stages of planning, for the bank
making the acquisition to obtain more funds than are necessary for ordinary operations, not
least in view of the substantial progress the capital market has made in recent years;
acquiring capital in advance would primarily affect the shareholders, by reducing the return
on their capital. The authorizations contain mandatory provisions to coordinate the making of
investments in shareholdings with the raising of capital. In order to provide safety margins
with respect to the minimum ratios prescribed by the regulations, the Bank of Italy often
requires contingency plans for raising further capital to be drawn up, ready for
implementation in case of need.
The Bank of Italy performs a different evaluation of mergers and acquisitions, entirely
separate from the examination of the prudential aspects, by virtue of the powers as antitrust
authority for the banking sector entrusted to it under Law 287/1990. I will not go into this
aspect in detail because it has no bearing on the facts that are the focus of attention today; in
the case of the Banca Nazionale del Lavoro, the opinion of the Antitrust Authority is pending.
The procedures followed by the Bank of Italy in the conduct of its supervisory activity comply
with the provisions of Law 241/1990, as amended, which regulate administrative
proceedings, making a distinction between the examination stage and the decision-making
stage.
In the interests of a desirable plurality of technical evaluations, these stages have always
been characterized by a dialectical approach correlated with functional roles, professional
capacities and related responsibilities.
The internal regulations prescribe how these dialectical positions are synthesized and
regulate the powers and duties of the people authorized to make decisions.
2. Transactions involving the capital of Banca Antoniana Popolare Veneta
(Antonveneta)
2.1 Governance structure of Banca Antonveneta
During 2004 relations between the members of the shareholders' agreement governing
Banca Antonveneta (ABN Amro, Lloyd Adriatico and some entrepreneurs) became
increasingly strained, mainly because of the large number of participants and the diversity of
their objectives; in December some of them announced their intention not to renew the
agreements upon expiry. Given this situation, ABN Amro, which in June 2004 had expressed
an interest in increasing its holding in Antonveneta, signified its willingness to find a solution
for the bank's governance that would safeguard its
investment; on the other hand, Banca Popolare di Lodi (BPL) informed the Bank of Italy that
it intended to put itself forward as reference shareholder in the search for new governance
arrangements for Antonveneta.
From the point of view of the Bank of Italy, the uncertainties surrounding the evolution of
Banca Antonveneta's ownership structure threatened to destabilize its management policies,
thereby undermining the effectiveness of the ongoing internal reorganization and
enhancement of the bank's balance-sheet assets; this process had been initiated recently by
the management in order to solve the considerable operating and organizational problems
from which Antonveneta had been suffering for some time;the consolidated profit and loss
account for 2003 closed with a loss of €842 million, partly as a result of substantial value
adjustments to loans. In 2004 it showed a profit of €282 million.
Against this background of uncertainty, ABN Amro and BPL were repeatedly urged to reach
an agreement that would ensure the sound and prudent management of Banca Antonveneta.
Contacts between the two parties in the early months of 2005 nonetheless failed to produce
mutually acceptable solutions regarding either the governance of the bank or commercial
agreements; on the contrary they led to an acceleration of plans by both parties to undertake
transactions involving the capital of Banca Antonveneta.
2.2 BPL's application to increase its shareholding to 14.9 per cent of Banca
Antonveneta's capital
On 4 February BPL gave the Bank of Italy prior notification of a plan to acquire 14.9 per cent
of Antonveneta's capital. A formal application was sent on 11 February; the Bank of Italy
granted authorization on 14 February, ten days after the notification.
The capital needed to ensure the sustainability of the transaction was to come from an
existing surplus of own funds and the forthcoming issue of a €300 million subordinated loan
for which authorization had already been obtained. The plan drawn up by BPL to strengthen
its capital base by issuing additional instruments was designed to maintain a high solvency
ratio even after the investment.
Since the issue of the capital instruments announced by BPL would take a few weeks, in the
authorization measure the bank was invited to proceed gradually in acquiring the
shareholdings; the document contained a further request that additional measures to
strengthen capital be scheduled for the end of 2005 to take account of the effects of the
application of the new International Accounting Standards.
In the weeks after 14 February technical meetings were held to discuss the proposed issue
of capital instruments with innovative features; the Bank of Italy requested additional
documentation and after careful examination demanded changes to the transaction;
consequently the preparation of the issue took longer than initially planned.
2.3 ABN Amro's applications for authorization
On 15 March 2005 ABN Amro informed the Bank of Italy, in its prior notification, that it was
interested in acquiring control of Banca Antonveneta through a complete-acquisition tender
offer.
ABN Amro sent the official request for authorization, accompanied by the prescribed
documentation, to the Bank of Italy on 30 March. In compliance with the requirements of
European legislation and the supervisory Instructions, the Bank of Italy, after subjecting the
documents to a preliminary examination, on 12 April applied to the Dutch supervisory
authority for information regarding ABN Amro.
On 12 April ABN Amro requested authorization to hold shares in excess of the thresholds of
15 and 20 per cent of capital, on the grounds that it wished to ensure the success of its bid.
One complex point that arose in the course of the examination was the fact that ABN Amro
was in possession of bonds convertible into Antonveneta shares; conversion of these bonds
would have had major effects on the ownership structure and governance of Antonveneta.
On 19 April, seven days after the formal application was made, the Bank of Italy authorized
ABN Amro to increase its shareholding in Banca Antonveneta to 20 percent.
At the time it was not possible to give permission to go beyond that threshold: authorization
to do so would have placed the Dutch bank in a position to increase its holding to the next
threshold prescribed by the regulations, 33 per cent; attainment of that threshold would have
made a tender offer mandatory, whereas the application to gain control of Antonveneta by
means of a voluntary tender offer was still being evaluated.
On 20 April ABN Amro formally undertook not to exceed 30 per cent of Antonveneta's
capital, thereby making the potential bond conversion into the bank's shares irrelevant for the
purpose of calculating ABN Amro's total shareholding. On 27 April the Bank of Italy
authorized ABN Amro to acquire up to 30 per cent of Antonveneta's capital.
On 6 May, once the necessary analyses and verifications and the consultation with the Dutch
authorities had been completed, ABN Amro was authorized to take control of Banca
Antonveneta. The examination, which began with ABN Amro's prior notification on 15 March,
lasted 52 days; starting from the date of the formal application for authorization, which was
submitted on 30 March, the inquiry lasted 37 days; 17 days were taken up by the
consultation with the Dutch authorities.
The tender offer terminated on 22 July 2005, with the shares tendered amounting to just over
2 per cent of Antonveneta's capital. ABN Amro publicly announced its intention to return the
shares acquired during the tender offer and that it was not interested in remaining a minority
shareholder in Banca Antonveneta.
2.4 BPL's additional investment
On 31 March BPL announced its intention to increase its shareholding in Antonveneta to
29.9 per cent and submitted a formal application for authorization on 4 April.
During the technical meetings held to assess whether BPL had sufficient capital, the Bank of
Italy asked the bank's officers to explain how the capital requirements would be met. They
replied that steps would be taken to match the disbursement with actions to strengthen the
capital base; proposals included the use of securities lending and the pledges of shares in
order to acquire voting rights of the order of 10 per cent of Antonveneta's capital; the sale to
foreign banks of minority shareholdings in companies controlled by the group for an overall
value of around €1 billion; and additions to the subordinated loans already planned. Finally,
in a longer term perspective, a substantial capital increase was envisaged to support the
bank's growth plans.
The estimates submitted by BPL showed the investment to be sustainable. The cost of
acquiring the entire 29.9 per cent share in Banca Antonveneta's capital was estimated at
around €2 billion, while the new capital resources that were the subject of the two
applications for authorization amounted to €2,275 million, later raised to €2,380 million. At
the end of the transaction the bank's capital ratio would stand at 10.3 per cent.
On 7 April authorization was granted, seven days after the start of the examination of the
application. Even assuming unfavourable developments regarding certain variables,
acquisition of the shareholding appeared compatible with the sound and prudent
management of the BPL group.
After obtaining authorization for the shareholding, BPL asked the Bank of Italy to approve the
issue of the instruments to strengthen its capital base described in the application and to
include them in the computation of supervisory capital. The Bank of Italy called for changes
in the terms and conditions of the issues, so that they would have standard technical
features; the authorizations were granted in measures adopted after examinations lasting up
to one month.
In the meantime the Bank of Italy held several technical meetings to keep abreast of
developments in the capital strengthening plan and, in particular, the sale of minority
holdings of companies belonging to the group.
On 29 April BPL's shareholding reached 29.5 per cent of Antonveneta's capital. On 30 April
the shareholders' meeting of Banca Antonveneta renewed the governing bodies and
appointed members put forward by BPL. Subsequently, according to the documents
produced by BPL at the beginning of May, it was found that the acquisitions had been
effected with less recourse to securities lending and pledges of shares than originally
proposed; moreover, it appeared that the timetable for the sale of minority shareholdings had
not been respected. As a consequence, from April of this year the capital ratios were briefly
out of line, although the shortfall was subsequently removed.
These circumstances have no bearing on the effects of the authorization already granted by
the Bank of Italy, as confirmed by the recent decision of the Lazio Administrative Court dated
13-19 July and filed on 9 August, but they are relevant for sanctions. The relative
investigations, which began immediately, concluded with a formal notice issued on 29 July to
the members of BPL's board of directors and board of auditors.
2.5 BPL's takeover bids for Antonveneta
On 22 April Banca Popolare di Lodi gave the Bank of Italy prior notification of a plan to
acquire control of Banca Antonveneta by means of an exchange tender offer. The formal
application was filed on 5 May. Preliminary estimates showed that BPL's capital ratios after
the acquisition would have been above the regulatory minimum regardless of the amount of
shares tendered. Moreover, the planned capital increase of €1.5 billion would have further
increased the capital surpluses.
In April Consob, with which the Bank of Italy had begun cooperating in February with regard
to the transactions involving Antonveneta's capital, intensified its checks.
Among other matters, Consob informed the Bank of Italy of the acquisition of Antonveneta
shares by BPL on behalf of a number parties. Consob investigated this activity on the basis
first of information requested from BPL and then of inspections and the Central Credit
Register data it requested on two occasions from the Bank of Italy. The requests for Central
Credit Register data were transmitted on 20 April and 4 May and satisfied by the Bank of
Italy in six and two working days respectively.
With a resolution dated 10 May Consob, proceeding on its own authority, found that an
undeclared shareholders' agreement existed between BPL and other Antonveneta
shareholders for the concerted acquisition of Antonveneta shares and the exercise,
individually or jointly, of a dominant influence over Antonveneta; the resolution also drew
attention to the manner in which loans had been granted for the purchase of Antonveneta
shares.
The Bank of Italy promptly notified the suspension of voting rights to the persons indicated in
the Consob resolution and initiated the administrative sanction procedure against them for
violations of the provisions concerning the notification of shareholders' agreements to the
Bank of Italy and the authorization to acquire major shareholdings. Furthermore, judging that
there had been instances of non-compliance with the rules on credit management, the Bank
of Italy initiated an additional sanction procedure against BPL.
The Consob resolution, which was transmitted to the Bank of Italy in a letter dated 11 May,
substantially modified the information available to the Bank; the obligation to make a tender
offer, with a further outlay of cash, altered the overall context of the supervisory evaluations.
On 17 May BPL, conforming with the obligations resulting from Consob's finding, applied to
the Bank of Italy to authorize the mandatory cash tender offer as well and transformed the
exchange tender offer for which it had applied for authorization on 5 May into a cash and
exchange tender offer basically similar in content to the exchange tender offer.
At the same time BPL executed a shareholders' agreement among the persons indicated in
the Consob resolution, which was notified pursuant to Article 20 of the Consolidated Law on
Banking.
On 2 June the shareholders' meeting of Banca Popolare di Lodi approved a €1.5 billion
capital increase; on the same occasion the name of the bank was changed to Banca
Popolare Italiana (BPI). The offering terminated on 15 July with an acceptance rate of 99 per
cent, which took the capital ratios well above the regulatory minimums.
In view of the uncertainties regarding the transactions for the capital cover of the mandatory
tender offer, on 8 June the Bank of Italy asked BPI to submit documents on the actions
intended to ensure that the 8 per cent requirement would continue to be satisfied after the
acquisition. In addition, the Bank formalized some especially stringent guidelines that BPI
was to follow in order to ensure that the bank's capital base could sustain the mandatory
tender offer.
BPI responded to the requests by providing updates and documents on the capital
strengthening needed to sustain the acquisition of control of Banca Antonveneta.
Lastly, on 20 June the Bank of Italy initiated an inspection of a general nature at BPI, inter
alia with the aim of checking, in connection with the acquisitions, the bank's capital ratios, its
credit disbursement and management procedures and its statistical reports. The first checks
concerned the amount of BPI's own funds.
The latter initiative came after the start on 9 June of an inspection at Antonveneta to check
whether the functioning of the bank's ordinary operations had been impaired by the
temporary uncertainty stemming from the precautionary suspension of the shareholders'
resolution of 30 April renewing Banca Antonveneta's governing bodies, ordered by the Court
of Padua on 21 May. The inspection ended on 24 June without significant findings.
2.6 The examination of BPI's proposed tender offers.
The examination, conducted according to the criteria and methods referred to above,
focused principally on three aspects material to the granting of authorization to acquire
control of Antonveneta: a) the BPI group's capital adequacy; b) BPI's "quality" as a
shareholder, taking account of the above-mentioned Consob resolution and the consequent
steps taken by the Bank of Italy; and c) the checks carried out by the Bank of Italy regarding
the conduct in connection with the temporary shortfall of BPI's capital ratio.
On the last two points the Bank of Italy continued to avail itself of the advice of authoritative
jurists who had collaborated with it from the start of the Antonveneta case. Recourse was
made to outside experts in view of the complexity of the factors to be evaluated, the novelty
of the case and the extremely specialized nature of the matter, including its practical
application. Professors Agostino Gambino, Massimo Luciani, Fabio Merusi and Paolo
FerroLuzzi collaborated; Professors Gambino and Luciani were part of the Bank of Italy's defence
team in the trial before the Lazio Administrative Court.
The examination began by estimating the overall capital ratio at 30 June on the basis of the
documentation and statements produced at the time by BPI. The ratio was found to be equal
to
9.2 per cent on the more restrictive assumption that the shareholding already held would be
consolidated using the equity method; if it were not consolidated, taking into account the
intervening suspension of the voting rights attaching to it and the absence of BPI
representatives on Antonveneta's board of directors, BPI's capital ratio would have been
higher than 11 per cent.
Considering the capital strengthening measures envisaged by BPI, and particularly the
capital increase of €1.5 billion then under way, it was found that the bank's capital base could
sustain the transaction in the event of the tender offers succeeding. However, the
examination also revealed uncertainties as regards the situation that would emerge with the
year-end application of the International Accounting Standards, due to put options issued by
BPI to third parties on shares of group companies and the commitment to purchase
Antonveneta shares owned by the other parties to the shareholders' agreement. As regards
the conduct deemed material for the purpose of verifying compliance with the requirements
for the quality of the shareholders and sound and prudent management, an initial phase of
the examination found questionable conduct in business dealings by shareholders of
Antonveneta, in relation to the facts brought to light by the Consob resolution of 10 May and
the checks carried out by the Bank of Italy.
For a fuller evaluation of the facts, the analysis of these aspects was usefully supplemented
by the observations already made by the legal advisors; the results of a further consultation
contributed significant elements for an appreciation of the case from the standpoint of the
granting of authorization.
The convergent opinions of the legal advisors, authoritative and expert in the matter, were
considered to overcome the various doubts that had arisen in the first phase of the
examination and to provide a correct interpretation of the letter and the spirit of Italian and
Community legislation.
On 11 July 2005 the Bank of Italy authorized BPI to acquire control of Antonveneta, giving an
ample account of the grounds for its decision in the authorization measure.
The integration of the two banks as envisaged in the business plan presented positive
aspects from the supervisory point of view, considering the significant synergies that would
arise, partly as a consequence of the new group's strong territorial roots.
On the basis of the advisors' opinion, the authorization measure recalled the necessary
autonomy of the Bank of Italy's evaluation of matters able to impair sound and prudent
management with respect to the above-mentioned Consob resolution.
It was observed that the law provides for the mandatory tender offer as an ex post remedy in
favour of minority shareholders; accordingly, a comparison of the different interests led to the
conclusion that the consequences of denial of authorization were so serious that such a
course was possible only if the applicant bank was found to be manifestly unsuitable, to an
extent that rendered the threat to the target bank's stability obvious.
In addition, separate evaluations were made of the conduct of the bank's corporate officers
and the "reliability" of the bank. According to the approach adopted, the conduct was
punishable with administrative sanctions. The imposition of an administrative sanction does
not affect the reliability of the bank, which is the effective applicant for authorization and its
ability to ensure sound and prudent management is not in question. As regards the conduct
in question, the sanction procedure had already been initiated by the Bank of Italy.
Similar considerations hold for the temporary shortfall of the capital ratio, since, as noted
earlier, this had been made good in full and the Bank of Italy had already initiated the
administrative sanction procedure for violation of the rules on capital requirements.
With regard to BPI's prospective capital adequacy, account was taken of its formal
commitments to meet any need for a further strengthening of its own funds and of the
feasibility of the steps it envisaged. At all events the Bank of Italy expressly required BPI to:
- launch the cash/cash and exchange tender offer once the conditions for the
successful outcome of the capital increase then under way had been verified;
- reformulate the shareholders' agreement between BPI and the other shareholders of
Antonveneta, so as to avert a negative impact on capital adequacy with the entry
into force of the International Accounting Standards for supervisory purposes;
- modify the agreements concluded with Société Genérale, Deutsche Bank and
Dresdner Bank for the transfer to them of up to 30 per cent of the Antonveneta
shares acquired in the cash tender offer for subsequent resale on the market and
reduce the market risk borne by BPI;
- take every step that might be necessary in the future to ensure compliance with the
prudential rules.
The examination began on 22 April with the prior notification transmitted by BPI and lasted
80 days. From the date the first formal application was submitted (5 May), it lasted 67 days,
including the period in which the time limit was suspended.
Meanwhile, the Bank of Italy and Consob continued to exchange information and
documentation in the context of their ordinary cooperation. The Bank of Italy described in
detail the fact-finding activities it had begun and the checks and inspections under way,
notifying Consob of each decision it made concerning BPI's acquisition of control of
Antonveneta.
2. Actions under administrative law and the ruling of the Lazio Administrative
Court
Between April and June ABN Amro decided to apply for legal remedies, requesting, among
other things, the annulment or revocation of the authorizations issued by the Bank of Italy to
BPL (now BPI) whereby the latter had been progressively authorized to raise its holding in
Banca Antonveneta to 29.9 per cent.
These applications were examined by the Lazio Administrative Court, which on 28 April
dismissed the applicant's request for suspension of the authorizations and then issued its
ruling on the merits of the case, dated 13-19 July and filed on 9 August.
The Administrative Court recognized the full legitimacy of the acts of the Bank of Italy.
The judges preliminarily excluded that BPL had been granted favoured treatment with the
issue of its authorizations in less time than had been taken for ABN Amro, since the two
applications involved different situations (BPL's directed towards the acquisition of minority
albeit qualifying holdings, ABN Ambro's towards the acquisition of control), that merited
distinct evaluations.
In this regard, I recall that the examination for the granting of authorization to acquire control
of Antonveneta lasted 52 days for ABN Ambro and 80 days for BPI.
In stating the grounds for its ruling, the Administrative Court underscored that the go-ahead
for the transaction was "formulated in such as way as to reconcile the preeminent needs of
banking supervision with the characteristic dynamism of market transactions", and affirmed
that the authorization for BPI to increase its interest in Antonveneta up to 29.9 per cent came
at the end of "an examination that appears to have been complete and appropriate" and that
the Bank of Italy had evaluated the sustainability of the transaction from the "standpoint of
sound and prudent management".
Furthermore, the Court confirmed the correctness of the conduct of the Bank of Italy, on the
grounds that "the Bank of Italy is required to verify not so much the current amount of the
applicant's own funds in relation to the entire planned acquisition, as the adequacy and
practical feasibility of the proposed plan for capital strengthening, thereby making a forecast,
with a high degree of technical discretion, in which its institutional functions are ultimately
manifested".
The Administrative Court also explicitly ruled that supervisory indications imparted at the time
of granting an authorization are not conditions for the effectiveness of the authorization; they
constitute accessory elements by way of guidance.
Consequently, supervening developments do not impinge on the effects of the authorization
measure or its legitimacy, but ar