WRITTEN QUESTION E-3348/98

by Ernesto Caccavale (UPE) to the Commission

(16 November 1998)

Subject: Alleged irregularities in the plan to reorganize the Banco di Napoli

The European Commission recently indicated that it approved of the plan to restructure and privatize the Banco di Napoli, authorising the aid envisaged by the Italian Government and the merger between that bank and the Banca Nazionale del Lavoro (BNL). According to certain press reports, there is reason to believe that the Commissioner responsible for competition, Mr Van Miert, has instructed the Banco di Napoli to hand over or close 18 branches by the end of 1998. Furthermore, there are reasons to believe that both national and European funds - in the context of the European Social Fund - originally earmarked for vocational training courses have been used to take on new staff. In this connection it should be remembered that the Commission recently infringement proceedings against the Italian Post Office because of this kind of irregularity.

Can the Commission therefore say:

- whether these reports are true;

- whether it does not consider that there are valid reasons to justify the initiation of infringement proceedings against the Italian State because of the misuse of European training funds, which have allegedly been used for taking on new staff;

- finally, whether it does not consider that the Banco di Napoli is being penalized by being asked to make further sacrifices, such as closing some of its branches, which would directly result in undermining the bank's already fragile structure and penalize the least protected sections of its staff in regions which already suffer from high unemployment?

Answer given by Mr Flynn on behalf of the Commission

(12 February 1999)

The measures involving the granting of aid to the Banco di Napoli by Italy - the subject of the Commission's decision of 29 July 1998 - have brought advantages for the bank and have had the effect of distorting competition in the banking sector. The Banco di Napoli incurred substantial losses owing to shortcomings in its administration and a management system with a high level of risk. These losses led to the State adopting aid measures designed to separate and dispose of risk assets (SGA) and injecting additional own resources to allow the Banco di Napoli to comply with statutory solvency conditions. If the State had not intervened, the bank as an independent player would have disappeared from the market.

Consequently, the counterparts required by the Commission in line with the rules on State aids, whilst certainly constituting additional sacrifices, must be regarded as necessary in order to mitigate the distorting effect of aids. If aid had not been accompanied by counterpart requirements to mitigate the effects on competitors, its only effect would have been to transmit the sector's adaptation problems, including those of a social nature, to those competitors.

As regards the allegation of irregularities in the management of European Social Fund (ESF) resources, the Commission is not aware of the irregularities referred to by the Honourable Member.

The Commission and the national authorities regularly visit final beneficiaries in order to check that ESF resources are being properly managed. If an irregularity is discovered, they initiate the procedures available under existing legislation with a view to recovering the resources consumed and possibly taking action against the parties responsible for the irregularity.

The Commission will contact the national authorities on this subject.