EN ECB -PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 27 December 2013  
on a capital increase of the Banca d’Italia  
(CON/ 2013/ 96) 
 
Introduction and legal basis  
On 22 November 201 3, the European Central Bank (ECB) received a request from the  Ministry of 
Economy and Fina nce for an opinion on a draft decree -law providing for a capital increase of the Banca 
d’Italia  and laying down principles for amendments to the Statute of the Banca d’Italia . The Decree -
Law was adopted on 30 November 2013 . This opinion is based on the Decree-Law adopted by the 
consulting authority1 (hereinafter the ‘Decree -Law’). 
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on 
the Functioning of the European Union  and the  third  indent of Article  2(1) of Co uncil 
Decision  98/415/EC of 29  June 1998 on the consultation of the European Central Bank by national 
authorities regarding draft legislative provisions2, as the Decree -Law relates to the Banca d’Italia . In 
accordance with the first sentence of Article  17.5 of the Rules of Procedure of the European Central 
Bank, the Governing Council has adopted this opinion.  
 
1. Purpose of the Decree -Law 
The Decree -Law provides for a n increase of the Banca d’Italia ’s share capital  by conver ting statutory 
reserves into capital . The share capital, set by the Banking Law of 1936 at EUR 156 000, has been 
estimated to be between EUR 5 billion and EUR 7.5 billion by a High Level Group of Experts  
established by the Banca d’Italia3 and is to  be updated accordingly . While the draft dec ree-law 
envisage d a capital increase in this range, the Decree -Law simply authorises the Banca d’ Italia to raise 
its capital to EUR  7.5 billion.  
Furthermore, material changes in profit distribution  are envisaged , with a nnual dividend s to 
shareholders drawn  on net profits to be capped at six per cent of the share capital , to the  exclusion of 
any further payouts to shareholders4. 
                                                 
1  Gazzetta Ufficiale della Re pubblica Italiana  No 281, 30.11.2013.  
2  OJ L 189, 3.7.1998, p. 42.  
3  The note released by the High Level Group of Experts was attached to the draft decree law . 
4  See Article 6(5)(b)  of the Decree -Law, which  specifies that the economic rights of shareho lders are limited to what is 
provided for in Article 4(2) , i.e. updated value of the shares and Article 4(3), i.e. annual dividends only, out of net 
profits, for an amount no greater than 6% of the ca pital of the Decree -Law. 
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2 In addition , the authorities aim  to foster  the Banca d’Italia ’s independence and the public ’s perception 
of that independence  by me ans of a more balanced distribution of the shares among shareholders. The 
shareholding s of individual shareholders and the attached voting rights are  capped at five per cent  of 
the Banca d’Italia ’s share capital . The range of eligible  shareholders is broad ened to include  pension 
funds  while  also specifying the eligibility of all commercial banks , and the Banca d’Italia is authorised  
to carry out temporary transaction s in its own shares.  
Pursuant to Article 6(6) of the Decree -Law, the Banca d’Italia’ s shareh olders shall transfer their shares 
to their trading book ‘at the value at which they were stated in the  item of origin ’. The same provision 
specifies that, except as provided for above , International Accounting Standards (IAS) (now 
International Financial Reporting Standards5 (IFRS) ) shall apply.  
 
2. The appropriate time to consult the ECB  
The ECB has underlined in several opinions that ‘even in cases of extreme urgency national authorities 
are not relieved from their duty to consult the ECB and to allow su fficient time to take the ECB’s views 
into account as laid down in Articles 127(4) and 282(5) of the Treaty’6. Moreover , Article 3(4) of 
Decision 98/415/EC obliges the Member States to suspend the process of adoption of draft legislative 
provisions pending  the receipt of the ECB’s opinion. The ECB received the consultation request on 
22 November 2013 , and t he Decree -Law was adopted on 30 November 2013 . Since the adoption of 
legislative provisions prior to delivery of the opinion or expiry of the set deadlin e is tantamount to a non -
consultation of the ECB , the ECB would like to remind  the Ministry  of the proper procedure for 
consultation7, in particular taking into account the relevance of the legislation for the Banca d’Italia and 
the Eurosystem . 
 
3. Capital in crease and the Banca d’Italia ’s independence  
3.1 The principle of financial independence , which is an aspect of the principle of central bank 
independence for the members of the European System of Central Banks (ESCB) enshrined in 
Article 130 of the Treaty , requires a national central bank ( NCB ) to have sufficient means to not 
only perform its ESCB -related  or Eurosystem -related tasks , but also its national tasks , e.g. 
financing its administration and own operations8. Financial independence also carries an 
implication  that NCBs should always be sufficiently capitalised. In particular, the ECB is of the 
view that the higher the level of capital, reserves and provisions against financial risks, the higher 
the safeguards will be against future losses9. NCBs must  be free to independently create financial 
                                                 
5 Available on the IFRS Foundat ion’s website at  www.ifrs.org . The Decree -Law under scrutiny by reference to 
Legislative Decree  No 38/2005  restates that application of international accounting standards is mandatory . 
6  See Opinion CON/2012/20; see als o Opinions CON/2012/4, CON/2012/9 and CON/2012/13.  All ECB opinions are 
published on the ECB’s website at www.ecb.europa.eu.  
7  See Opinion CON/2012/20.  
8  See the ECB’s Convergence Report 201 3, p. 2 5. 
9  See Opinion CON/2010/88 . 
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3 provisions and buffers  to safeguard the real value of their capital and assets. Additionally, 
Member States  should  not impede NCBs in building up their reserve capital to a level  that is 
necessary for a member of the Eurosystem to fulfil its tasks10. 
3.2 The ECB takes note of the authorisation to  increase the Banca d’Italia ’s capital and understands 
that it has been  proposed  in close cooperation with the Banca d’Italia , which  set up a High Level 
Group of Experts  to assess the current value of its shares . In fact, t he ECB  considers it important 
from the perspective of central bank independence that such decisions are  initiated and taken in 
close cooperation with the relev ant NCB11. 
3.3 With regard  to financial independ ence, it is pointed out  that the Banca  d’Italia should  always  be 
sufficiently capitalised12, and  that the Banca d’Italia needs to be able  to independently create, 
build up and replenish adequate financial buffers commensurate with the level of risks arising  
from the nature of its activities, including reserves representing retained profits, in order to 
preserve an appropriate level of net equity13. 
3.4. The High Level Group of Experts established by Banca d’ Italia carried out a valuation exercise 
according to  a ‘dividend discount model’  based on selected parameters , e.g. the free -risk interest 
rate, the dividend growth rate , the ‘Beta’ coefficient of the shares of the Banca d’Italia, the equity 
premium and the liquidity discount14. The ECB understands that such  a long -term assessment, 
where assumptions about future dividends over a period of more than 20 years  are being made, 
requires a certain degree of  conjecture  regarding the quantification of key parameters . 
Nevertheless , additional  details on the quantitati ve assumptions underlying the assessment would 
be important . In any case , the ECB recommends that the  Banca d ’Italia, having been fully 
involved in the valuation exercise and being best placed to assess its required level of capital15, 
acts prudently and in  accordance with principles and objectives of the ESCB  when  effect uating 
the capital increase16. 
3.5 Since the existing statutory reserve will be partly incorporated into the Banca d’Italia’s share  
capital in  order to carry out  the capital  increase , the ame nded rules should ensure , with the aim of 
safeguarding the Banca d’Italia’s financial independence,  that such reserve may be  gradually 
replenished  over an appropriate period of time and up to the amount  deemed necessa ry to 
safeguard the value of the Banca d’Italia ’s capital and assets . In this respect, t he ECB welcomes  
that Article 6(5)(a) of the Decree -Law requires the Statute  of the Banca d’Italia to contain 
                                                 
10  See the ECB’s Convergen ce Report 201 3, p. 2 6; see also Opinion CON/2009/26.  
11  See Opinion CON/201 0/88. 
12  See ECB’s Convergence Report 2013, p. 25.  
13  See Opinion CON/2012/69.  
14  Note of the High Level Group of Experts, p. 3 . 
15  See the ECB’s Convergence Report 2013, p. 26; see  also paragraph 2.1 of Opinion CON/2010/88.  
16  Pursuant to Art icle 10(2) of Legislative Decree No 43 of 10 March 1998, referred to by Article 3(5) of the Decree -
Law, amendments to the Statute of the Banca d’Italia are voted on in  the extraordinary meeting of shareholders and 
transposed in the form of a Presidential Decree on proposal of the President of the Council of Ministers acting 
together the Ministry of the Treasury, the Budget and Economic Planning.  
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4 provisions ensuring that the Banca d’Italia maintain s adequate capital safeguards against risk, 
consistent with ESCB standards . The ECB furthermore  considers it important from a financial 
independence  perspective that the current mechanism  provided for in  Article 39 of the Statute of 
the Banca d’ Italia , which allocates part of the annual net profits to  the Banca d’Italia’s reserve s, 
is preserved . 
 
4. Amendments to the Statute  of the Banca  d’Italia  
4.1 It is understood that , pursuant to Article s 4(5) and 4(6) in conjunction with Article 6(5) of the 
Decree -Law, shares representing more than the current maximum five per cent  of the Banca  
d’Italia ’s share capital , while not bestowing voting rights, shall grant their holders attached rights 
to dividend s from declared profits  for a period of no longer than 24 months starting from the 
completion of the capital increase17. At the end of th at period , any dividend  rights attached to 
such shares will be allocated to the Banca d’Italia ’s statutory reserves18. The Banca d’Italia may 
temporarily buy back such shares  from the shareholders  and enter into contracts to this effect  to 
enable compliance wit h the five per cent  limit imposed on  individual  shareholding s in the Banca  
d’Italia19. 
4.2 The Decree -Law establishes certain  general principles. The ECB understands that detailed rules 
on the imposition of limits on sharehold ings in the Banca d’Italia and any further clarifications  
regarding possible buy-back arrangement s and the relevant time limit  will be enacted by means 
of amendments to the Statute of the Banca d’Italia . The ECB has been consulted  on the proposed 
amendment s to the S tatute of the Banca d’Italia . 
 
5. Treatment of the Banca d’Italia’s shareholdings  
5.1 As a result of the recapitalisation operation authorised by the Decree -Law, the Banca  d’Italia 
shares  are to  be recorded in the balance sheets of its shareholde rs as positions in their trading 
book at the ir value prior to the operation  in order to create  a market fo r the Banca d’Italia ’s 
shares.  
5.2 In this respect it is important that the recapitalisation fully complies at all times with the existing 
Union prude ntial and accounting frameworks , and in particular that the rules on the 
reclassification of financial instruments as laid down by IAS -IFRS are not infringed20. Moreover, 
consistent application of the IFRS guidance on fair value measurement should be ensure d. 
 
                                                 
17  See Article 6(5)(c) of the Decree -Law. 
18  See Ar ticle 4(5) of the Decree -Law. 
19  See Article 4(6) Decree -Law. 
20  See in particular IAS 39(50).  
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5 6. The buy-back  scheme  
As mentioned above, the Decree -Law includes provisions authorising the Banca d’Italia to launch 
temporary buy -back operations to repurchase its own shares from shareholders holding more than five 
per cent  of the Banca d’Italia ’s share capital . The ECB understands that the possibility for the Banca 
d’Italia to enter into such a scheme may entail the transfer of financial resources to shareholders. 
However, t he terms of the scheme are not set out in the Decree -Law and t he scheme , while being in 
place only  temporar ily, will need to comply with relevant Union law s. 
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main,  27 December  2013.  
 
[signed]  
 
The President of the ECB  
Mario DRAGHI