Opinion of the European Central Bank of 3 February 2017 on liquidity support measures, a precautionary recapitalisation and other urgent provisions for the banking sector (CON/2017/1)
Date: 2017-02-03
Institutions: European Central Bank
Subjects: EU banking union, Italy, bank, financial stability, financial supervision, liquidity control, savings

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 3 February 2017 

on liquidity support measures, a precautionary recapitalisation and other urgent provisions for 

the banking sector 

(CON/2017/1) 

Introduction and legal basis 

On 27 December 2016 the European Central Bank (ECB) received a request from the Italian Minister of 

Economy and Finance (hereinafter the ‘Minister’) for an opinion on a Decree law on urgent measures for 

the  protection  of  savings  in  the  banking  sector  (hereinafter  the  ‘Decree  law’).  The  Decree  law  was 

adopted by the Italian Government on 23 December 2016 and has already entered into force. The Decree 

law must be converted into law by the Parliament within 60 days of publication in the Gazzetta Ufficiale, 

and amendments may be introduced during this conversion process. 

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  and  sixth  indents  of  Article 2(1)  of  Council  Decision 
98/415/EC1, as the Decree law relates to (1) the European System of Central Banks’ (ESCB’s) basic task 

of  implementing the Union’s monetary policy pursuant to Article 127(2), first indent, of the Treaty, (2) the 

specific tasks conferred upon the ECB pursuant to Article 127(6) of the Treaty concerning policies relating 

to  the  prudential  supervision  of  credit  institutions,  (3)  the  Banca  d’Italia  and  (4)  rules  applicable  to 

financial institutions insofar as they materially influence the stability of financial institutions and markets. 

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 

1.1  The  Decree  law  envisages  a  number  of  urgent  measures  affecting  the  banking  sector.  The  most 

significant  measures  aim  to  establish  a  legal  framework  to  provide  extraordinary  public  financial 
support  to  Italian  banks2  under  the  conditions  and  within  the  limits  set  by  Regulation  (EU)  No 
806/2014 of the European Parliament  and  of  the Council3 (hereinafter  the ‘SRM  Regulation’)  and 

1 

2 
3  

Council  Decision  98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
Banks having their registered office in Italy. See Article 1(2) of the Decree law. 

Regulation (EU) No 806/2014 of the European Parliament and of the Council of 15 July 2014 establishing uniform 
rules and a uniform procedure for the resolution of credit institutions and certain investment firms in the framework of 
a Single Resolution Mechanism and a Single Resolution Fund and amending Regulation (EU) No 1093/2010 (OJ L 
255, 30.7.2014, p. 1). 

 
 
 
 
                                                 
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the Italian transposition of the Bank Recovery and Resolution Directive (hereinafter the ‘BRRD’)4, 

according  to  which, in  order  to remedy a serious  disturbance  in  the  economy of a Member State 

and preserve financial stability, the provision of such public financial support does not imply that the 

receiving bank is failing or likely to fail for the purposes of triggering a resolution action. While the 

extraordinary public support is available to all Italian credit institutions fulfilling the relevant criteria 

under the Decree law, the first beneficiary under the framework is intended to be Banca Monte dei 

Paschi  di  Siena  (hereinafter  ‘MPS’),  and  the  Decree  law  contains    specific  provisions  for  the 

application of the measures to MPS. The Decree law provides for three categories of extraordinary 

public  intervention,  which  reflect  the  three  forms  envisaged  in  Article  18(4)(d)  of  the  SRM 

Regulation and Article 32(4)(d) of the BRRD: liquidity support provided by (1) a State guarantee of 
banks’  newly  issued  liabilities5  or  (2)  a  State  guarantee  of  emergency  liquidity  assistance  (ELA) 
operations  conducted  by  the  Banca  d’Italia6,  or  (3)  a  precautionary  recapitalisation7,  whereby  the 

State injects capital into a bank by subscribing to and purchasing its ordinary shares. 

1.2 

Liquidity support measures 

The  Decree  law  establishes  the  conditions  and  the  procedure  for  the  Ministry  of  Economy  and 
Finance (hereinafter the ‘Ministry’) to guarantee the liabilities of Italian banks until 30 June 20178. 

Such a State guarantee may only be issued for debt instruments which meet the criteria defined by 

the Decree law and which also have a residual maturity of no less than three months and no more 
than  five  years  (or  seven  years  in  the  case  of  covered  bonds)9,  and  will  never  be  provided  for 
liabilities that may qualify as regulatory own funds10. The amount of any such guarantee is limited 

to  what  is  strictly  necessary  to  restore  the  bank’s  medium-  to  long-term  funding  capacity  and,  in 
general, must not exceed regulatory own funds11. The criteria and limitations set out in the Decree 

law  are  largely  derived  from  the  Commission’s  Communication  on  applying  State  aid  rules  in  the 
context of the financial crisis (hereinafter the ‘2013 Banking Communication’)12. 

1.3  Further  to  the  2013  Banking  Communication,  the  procedure  for  requesting  a  State  guarantee  is 
subject  to  different  requirements,  depending  on  the  bank’s  situation13.  Support  may  be  provided 

through a guarantee scheme authorised ex ante by the Commission to banks which (1) meet own 

4  

5  
6  
7  
8  

9  
10  
11  
12  

13  

Directive 2014/59/EU of the European Parliament and of the Council of 15 July 2014 establishing a framework for 
the recovery and resolution of credit institutions and investment firms and amending Council Directive 82/891/EEC, 
and  Directives  2001/24/EC,  2002/47/EC,  2004/25/EC,  2005/56/EC,  2007/36/EC,  2011/35/EU,  2012/30/EU  and 
2013/36/EU,  and  Regulations  (EU)  No  1093/2010  and  (EU)  No  648/2012,  of  the  European  Parliament  and  of  the 
Council (OJ L 173, 12.6.2014, p. 190). 
See Article 32(4)(d)(ii) of the BRRD and Article 18(4)(d)(ii) of the SRM Regulation. 

See Article 32(4)(d)(i) of the BRRD and Article 18(4)(d)(i) of the SRM Regulation. 
See Article 32(4)(d)(iii) of the BRRD and Article 18(4)(d)(iii) of the SRM Regulation. 

This date may be further extended by a maximum of six months by a decree issued by the Ministry, subject to prior 
approval of the European Commission. See Article 1(4) of the Decree law.  
See Article 2 of the Decree law. 
See Article 5 of the Decree law. 
See Article 3 of the Decree law.  

See the European Commission’s Communication from the Commission on the application, from 1 August 2013, of 
State  aid  rules  to  support  measures  in  favour  of  banks  in  the  context  of  the  financial  crisis  (‘Banking 
Communication’) (OJ C 216, 30.7.2013, p. 1), in particular paragraphs 59 and 60. 

See Article 4 of the Decree law, which reflects paragraph 57 et seq. of the 2013 Banking Communication. 

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funds requirements under Article 92 of the Capital Requirements Regulation (CRR)14 and (2) do not 

have a ‘capital shortfall’ (which means a current or potential inadequacy of own funds with respect 

to  the  requirements  of  Article  92  of  the  CRR  in  combination  with  any  other  specific  mandatory 

requirements  established  by  the  competent  authority)  according  to  a  national,  Union  or  Single 

Supervisory Mechanism-wide stress test or asset quality review. Access to the State guarantee for 

banks which do not meet either of these two criteria, but which nevertheless have positive equity 

and are in urgent need of liquidity support, is subject to an individual notification and approval by 
the  Commission15.  The  relevant  competent  authority,  namely  the  ECB  or  the  Banca  d’Italia, 

depending on the significance of the requesting credit institution for purposes of Council Regulation 
(EU)  No  1024/201316  (hereinafter  the  ‘Single  Supervisory  Mechanism  (SSM)  Regulation’), 

assesses  the  fulfilment  of  these  criteria.  All  other  aspects  of  the  bank’s  application,  both  for 

significant  and  less  significant  institutions,  are  managed  by  the  Banca  d’Italia.  Where  the 

application is subject to individual notification, or in any situations where the nominal amount of the 

instruments  for  which  the  guarantee  is  requested  exceeds  EUR  500  million  and  5  %  of  the  total 

liabilities of the bank, a restructuring plan must be submitted by the bank within two months of the 

guarantee  being  issued,  confirming  the  bank’s  profitability  and  funding  capacity  in  the  long  term 
without  public  support17.  The  restructuring  plan  must  be  assessed  by  the  Commission.  A 

restructuring  plan  is  also  required  whenever  the  Ministry  is  notified  of  a  request  to  activate  the 

guarantee,  and  in  such  situations  the  plan  must  be  provided  within  two  months  of  the  activation 
request18.  

1.4  Under  the  Decree  law,  the  Minister  is  also  authorised  to  issue  a  guarantee  to  supplement  the 

collateral,  or  its  realisation  value,  mobilised  by  Italian  banks  to  guarantee  ELA  operations 
conducted by the Banca d’Italia, in compliance with the systems established by the ECB.19 A bank 

benefitting  from  the  guarantee  on  ELA  is  required  to  submit  a  restructuring  plan  confirming  its 

profitability  and funding capacity in  the long term  without  public support, in  order,  in particular, to 

limit reliance on temporary liquidity assistance provided by the Banca d’Italia.  

1.5  Precautionary recapitalisation 

Under the Decree law, the Ministry is authorised, until 31 December 2017, to intervene by means 

of  a  precautionary  recapitalisation  of  a  bank,  by  subscribing  to  or  purchasing  shares  issued  by 
Italian banks or parent undertakings of banking groups20. Such intervention may only be requested 

14  

15 

16   

17  
18 
19 
20  

Regulation  (EU)  No  575/2013  of  the  European  Parliament  and  of  the  Council  of  26  June  2013  on  prudential 
requirements  for  credit  institutions  and  investment  firms  and  amending  Regulation  (EU)  No  648/2012  (OJ  L  176, 
27.6.2013, p. 1). 
An  individual  approval  is  also  required  to  access  the  measure  for  banks  under  resolution  and  bridge  banks:  see 
Article 4(3) of the Decree law. 
See Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central 
Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). 
See Article 7(5) of the Decree law. 

See Article 8(3) of the Decree law, reflecting para. 59(e) of the 2013 Banking Communication. 
See Articles 10 and 11 of the Decree law. 

See Article 13(2) of the Decree law. 

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by a bank which, based on an adverse scenario under a national, Union or SSM-wide stress test 
exercise, needs to strengthen its capital21. 

1.6  Prior  to  the  request  for  State  support,  a  bank  is  required  to  submit  a  capital  raising  plan  to  the 

competent authority, namely the ECB for significant credit institutions and the Banca d’Italia for less 

significant  institutions.  The  adequacy  of  the  plan  is  assessed  by  the  competent  authority,  which 

must  inform  the  bank  and  the  Ministry  of  its  assessment.  If  the  plan  is  assessed  as  being 

insufficient,  the  bank  may  directly  request  State  intervention.  If  the  plan  is  assessed  as  being 

sufficient,  the  bank  must  implement  the  plan  and  update  the  competent  authority  regarding  the 

results  of  the  measures  adopted;  the  Ministry  is  informed  of  the  outcome  by  the  competent 

authority. If the measures prove to be insufficient to achieve the plan’s objectives, even before they 
are fully completed, the bank may submit a request for State intervention.22  

1.7  The request for State intervention must be submitted to the Ministry and to the competent authority, 

including  the  ECB  in  the  case  of  significant  credit  institutions  (and  to  the  Banca  d’Italia  in  such 
cases, where it is not the competent authority), and must include, inter alia23: (1) a list of the bank’s 

instruments  and  loans  which  would  be  subject  to  burden-sharing  measures,  indicating  their 

economic  value;  (2)  an  estimate  of  the  actual  value  of  the  bank’s  assets  and  liabilities,  for  the 

purposes of assessing compliance with the ‘no-creditor-worse-off-than-in-insolvency’ principle; and 

(3) a restructuring  plan,  drawn  up in accordance  with the  Union’s State aid framework. Within  60 

days of receiving the request for State intervention, the competent authority must communicate to 
the bank and to the Ministry the bank’s regulatory capital need24. 

1.8  The precautionary recapitalisation is conditional on the Commission’s approval of the restructuring 

plan pursuant to the Union’s State aid framework, and is executed via two decrees issued by the 

Minister. The precautionary recapitalisation may only be implemented if the bank is not deemed to 

be  failing  or  likely  to  fail  and  there  are  no  grounds  for  write-down  or  conversion  under  the  Italian 

transposition of the BRRD or the SRM Regulation. Banks will be regarded as not being in either of 
these situations in the absence of any statement to that effect by the competent authority25. 

1.9  While  in  principle  only  newly  issued  shares  may  be  subscribed  by  the  Ministry26,  the  Decree  law 

authorises  the  Ministry  to  purchase  shares  resulting  from  the  conversion  of  subordinated 
instruments in the implementation of the burden-sharing measures27.  

1.10  Collateralisation of the Banca d’Italia’s liquidity operations 

The  Decree  law  amends  the  Italian  transposition28  of  Directive  2002/47/EC  of  the  European 
Parliament and of the Council29, by introducing, for operations conducted by the Banca d’Italia to 

21  
22  
23  
24  
25  
26  
27  

28  

See Article 14(1) of the Decree law. 

See Article 14 of the Decree law. 
See Article 15 of the Decree law. 
See Article 16(1) of the Decree law. 
See Article 18(6) of the Decree law. 
See Article 19(1) of the Decree law. 

See  Article  19(2)  of  the  Decree  law.  Such  purchases  are  allowed  in  the  context  of  a  settlement  mechanism 
envisaged  by  the  Decree  Law  in  order  to  end  or  prevent  disputes  between  the  bank  and  the  retail  holders  of  its 
subordinated instruments which have been converted into shares. 

Legislative Decree no. 170/2004 (Gazzetta Ufficiale No 164, 15.7.2004). 

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address liquidity needs and secured by the pledge of a credit claim or a loan assignment, a special 
regime30  for  the  Banca  d’Italia,  on:  (i)  the  effects  vis-à-vis  third  parties  of  the  pledge  or  the  loan 

assignment, which is more favourable than the ordinary regime laid down in the Italian Civil Code, 

and (ii) the inapplicability of bankruptcy provisions on clawback actions. Moreover, the Decree law 

introduces a new provision that excludes the exercise of set-off rights against the Banca d’Italia for 
claims vis-à-vis the assignor or the pledgor of collateral31. 

1.11  Assessments of contributions due to the national resolution fund 

Finally,  the  Decree  law  confers  on  the  Banca  d‘Italia  the  power  to  determine  additional 

contributions to be paid to the national resolution fund to cover any obligations, losses, costs or any 
other liabilities borne by the fund in relation to the resolution actions32. 

2. 

General observations 

2.1  Proper timing to consult the ECB 

The  ECB  only  received  the  consultation  request  on  27  December  2016,  despite  the  fact  that  the 
Decree law entered into force on 23 December 2016. As underlined in several ECB opinions33, the 

ECB must be consulted at an appropriate stage in the legislative process. Consultation should take 

place at a time that enables the relevant national authority to take the ECB’s opinion into account 
before the provisions in question are adopted34. In the Italian legal system, a decree law, adopted 

by  the  Government,  enters  into  force  following  publication  in  the  Gazzetta  Ufficiale  and  must  be 

submitted on the same day of adoption to Parliament for conversion into law. If not converted within 

60 days of publication, the decree law is rendered invalid ab initio. Amendments may be introduced 

during  the  conversion  process.  In  the  light  of  the  foregoing,  the  ECB  should  be  consulted  before 

the adoption of a decree law by the Government. 

 2.2  Compliance with the Union’s legal framework 

National legislative provisions aimed at providing public support to the banking sector need to fully 

comply  with  Union  law,  including  the  criteria  governing  the  provision  of  extraordinary  public 

financial  support  to  credit  institutions  under  the  SRM  Regulation  and  the  BRRD  and  the  related 

communications  of the Commission on the  application  of  State aid rules to support measures for 

banks. 

 2.3   The role of the ECB as competent supervisory authority 

The Decree law envisages a role for the ECB, as the competent supervisory authority for significant 

29  

30   
31  
32  
33  

34  

Directive  2002/47/EC  of  the  European  Parliament  and  of  the  Council  of  6  June  2002  on  financial  collateral 
arrangements (OJ L 168, 27.6.2002, p. 43). 

This regime was already in force on the basis of temporary provisions.  
See Article 26(1)(b) of the Decree law, amending Article 3 of Legislative Decree no. 170/2004. 
See Article 25 of the Decree law. 
See,  for  example,  ECB  Opinion  CON/2012/64.  All  ECB  opinions  are  available  on  the  ECB’s  website  at 
www.ecb.europa.eu . 

See  the  second  sentence  of  Article  4  of  Council  Decision  98/415/EC  of  29  June  1998  on  the  consultation  of  the 
European Central Bank by national authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42); see 
also paragraph 4.1 of the Guide to consultation of the European Central Bank by national authorities regarding draft 
legislative provisions, which is available on the ECB’s website at www.ecb.europa.eu . 

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banks  within  the  Single  Supervisory  Mechanism,  in  the  procedures  leading  to  the  provision  of 

public  support  by  the  State,  including  the  assessment  of  the  fulfilment  of  the  own  funds 

requirements, the  determination of the size of the capital shortfall in the light  of the results of the 

relevant  stress  test  exercise  and  the  review  of  the  adequacy  of  banks’  capital  raising  plans 

submitted  prior  to  the  application  for  precautionary  recapitalisation.  The  ECB  emphasises  that  its 

role in this respect is derived from Union rather than national law, in particular the SSM Regulation. 

In  principle,  national  law  cannot  on  its  own,  without  proper  support  in  EU  law,  transfer 

responsibilities to a Union institution such as the ECB. The attribution of the role envisaged for the 

ECB  under  the  Decree  law  is  broadly  consistent  with  the  specific  prudential  supervisory  tasks 

conferred on the ECB under the Union legal framework governing banking supervision. The ECB 

understands  the  provisions  of  the  Decree  law  conferring  certain  obligations  on  the  competent 

authority  as,  in  the  case  of  the  ECB,  requests  that  the  ECB  may  choose  to  comply  with  at  its 

discretion, in accordance with the principle of sincere cooperation under Article 4(3) of the Treaty 

on European Union, whereby the Union and the Member States shall, in full mutual respect, assist 

each other in carrying out tasks which flow from the Treaties. The ECB stresses the importance of 

ensuring  cooperation  and  the  exchange  of  information  between  the  Italian  authorities  and  the 

competent supervisory authority, in accordance with this framework. 

2.4  Consultation of the ECB on future implementing rules under the Decree law 

The  ECB  understands  that  the  Minister  may  adopt  implementing  rules  on  the  provisions  of  the 
Decree  law35.  In  this  respect,  the  ECB  expects  to  be  consulted  on  significant  proposed 
implementing rules to be adopted on matters falling within the ECB’s fields of competence36. 

3. 

Specific observations on the liquidity support measures 

3.1  

Interaction of the State guarantee with the monetary policy of the euro area  

As stated in previous opinions on guarantee schemes for the liabilities of banks37, the ECB reminds 

the  consulting  authority  that  government  guarantees  for  bank  debt  should,  when  implemented:  (i) 

address the funding problems of liquidity-constrained solvent banks by improving the functioning of 

the  market  for  bank  debt  of  longer-term  maturities;  (ii)  preserve  the  level  playing  field  among 

financial institutions and avoid market distortions; and (iii) ensure consistency in the management 

of Eurosystem liquidity. In this regard, it is stressed that it is of the utmost importance that support 

operations  conducted  by  national  authorities  do  not  in  any  way  affect  the  conduct  and  the 
implementation of monetary policy in the euro area38. 

35  
36  

37  
38  

See Articles 12 and 23(1) of the Decree law. 
See the definition of ‘draft legislative provisions’ in Article 1(1), and also the sixth indent of Article 2(1) of Decision 
98/415/EC. 

See paragraph 3 of Opinion CON/2012/4. 
In particular, the ECB reiterates its view, already stated in various opinions, that the extension of a State guarantee 
to cover interbank deposits should be avoided, as this could entail distortions in national segments of the euro area 
money market (see, for example, paragraph 3.1 of Opinion CON/2009/73). 

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3.2   Minimum maturity of debt instruments benefiting from a State guarantee  

While  the  ECB  understands  that  a  State  guarantee  would  only  be  available  for  debt  instruments 

with  a  residual  maturity  of  at  least  three  months,  the  ECB  notes  that  a  separate  provision  of  the 

Decree  law  envisages  the  provision  of  guarantees  that  are  limited  to  financial  instruments  with  a 
maturity not exceeding two months39. The ECB suggests that the Decree law be clarified in order to 

remove any legal uncertainty which may arise in this respect.  

3.3  Emergency liquidity assistance operations collateralised by a State guarantee and the prohibition of 

monetary financing 

Regarding the provisions of the Decree law authorising the Minister to provide a State guarantee 

on  ELA  loans  provided  by  the  Banca  d’Italia,  the  ECB  notes  that  ELA,  granted  by  a  Eurosystem 

national central bank (NCB) independently and at its full discretion to a solvent financial institution 

on the basis of collateral security in the form of a State guarantee, is in principle possible, provided 

that  a  number  of  conditions  are  met  in  order  to  ensure  the  NCB’s  compliance  with  the  monetary 
financing prohibition under Article 123 of the Treaty40. The relevant conditions are the following: (i) 

it must be ensured that the credit provided is as short term as possible; (ii) there must be systemic 

stability aspects at stake; (iii) there must be no doubts as to the legal validity and enforceability of 

the State guarantee under the applicable national law; and (iv) there must be no doubts as to the 

economic adequacy of the State guarantee, which should cover both principal and interest on the 
loans,  thus  fully  preserving  the  NCB’s  financial  independence41.  These  elements  are  reflected  in 

the  Decree  law,  including  the  State  guarantee’s  aim  of  preserving  financial  stability,  and  that  the 

guarantee  must  be  irrevocable  and  cover  the  principal  amount  of  the  loan  and  any  interest.  It  is 

noted  that  the  guarantee  is  not  a  first  demand  guarantee,  but  rather  benefits  from  the  prior 

execution,  by  the  Banca  d’Italia,  of  the  collateral  mobilised  by  the  bank  in  order  to  access  ELA 

funding. 

3.4  The definition of capital shortfall in the context of a request for a State guarantee  

Regarding the definition of ‘capital shortfall’ in the context of a request for a State guarantee, the 

ECB understands that this definition encompasses, in line  with pre-existing supervisory decisions 

and  practice, the  threshold  used in  the relevant national, Union  or SSM-wide  stress  test or  asset 

quality  review  which  combines  own  funds  requirements  under  Article  92  of  the  CRR  with  the 

additional benchmarks established by the competent authority.  

4. 

Specific observations on the precautionary recapitalisation 

4.1   The need to inform the Ministry of the outcome of the assessment of a capital raising plan 

The  ECB  understands  that  the  requirement,  under  Article  14  of  the  Decree  law,  to  inform  the 

Ministry of the outcome of the assessment of the capital raising plan and of the measures adopted 

39  
40  

41  

See Article 7(7) of the Decree law. 
The  financing  by  an  NCB  of  an  insolvent  credit  institution  would  be  incompatible  with  the  monetary  financing 
prohibition since the NCB would be assuming a government task. 
See paragraph 2.2 of Opinion CON/2016/55, paragraph 4.11 of Opinion CON/2008/42, paragraph 3.9 and footnote 
34  of  Opinion  CON/2008/48,  and  paragraph  4.3  and  in  particular  footnote  20  referring  to  Opinion  CON/2008/46, 
which refers to paragraph 4.3 of Opinion CON/2008/58.  

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will apply only in connection with the request for precautionary recapitalisation from the bank itself. 

Indeed,  when  the  capital  raising  plan  to  remedy  the  shortfall  is  drafted  and  assessed  by  the 

competent authority there may be no evidence of any need for and/or no intention on the part of the 

bank to apply for a precautionary recapitalisation. 

4.2   Assessment by the competent authority of the bank’s regulatory capital need  

The ECB understands that the reference in Article 16 of the Decree law to the ‘regulatory capital 

need’ of a bank, regarding which the competent authority is required to inform the Ministry and the 

bank, is to be read, in line with Articles 32(4)(d) of the BRRD and 18(4)(d) of the SRM Regulation, 

as  referring  to  the  capital  shortfall  established  in  the  national,  Union  or  SSM-wide  stress  tests, 

asset  quality  reviews  or  equivalent  exercises  conducted  by  the  ECB,  the  European  Banking 

Authority or national authorities. 

5. 

The exclusion of set-off rights with respect to claims mobilised as collateral 

5.1  The  ECB  considers  the  Decree  law’s  provision  aimed  at  excluding  set-off  risks  associated  with 

credit  claims  accepted  by  the  Banca  d’Italia  as  collateral,  which  would  also  apply  to  Eurosystem 

credit operations, to be in line with the Statute of the European System of Central Banks and of the 

European Central Bank (hereinafter the ‘Statute of the ESCB’). Protecting the European System of 

Central Banks (ESCB) against potential losses arising from the acceptance of such collateral is in 

line with the requirement laid down in the second indent of Article 18.1 of the Statute of the ESCB, 

pursuant to which lending by the ESCB central banks must be based on adequate collateral. The 

ECB  notes  that  in  recent  years  other  euro  area  Member  States  have  also  enacted  statutory 

provisions  which  exclude  set-off  risks  related  to  credit  claims  mobilised  as  collateral  for  central 

bank  operations.  While  in  certain  Member  States  the  relevant  statutory  provisions,  similar  to  the 

Decree law, only exclude set-off rights for credit claims mobilised as collateral for operations with 

that  particular  Member  State’s  central  bank,  some  Member  States  also  have  statutory  provisions 
that, apart from their own NCBs, also provide protection for the ECB and other ESCB NCBs.42  

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 3 February 2017. 

[signed] 

The President of the ECB 

Mario DRAGHI 

42  

See Opinion CON/2016/37, paragraphs 1.1, 1.3, 2.3 and 2.4.  

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