Opinion of the European Central Bank of 11 September 2018 on amendments to the reform of popolari banks and cooperative banks (CON/2018/42)
Date: 2018-09-11
Institutions: European Central Bank
Subjects: Italy, company with share capital, cooperative bank, financial policy, financial stability, national law, parent company

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 11 September 2018  

on amendments to the reform of popolari banks and cooperative banks  

(CON/2018/42) 

Introduction and legal basis 

On 3 August 2018 the European Central Bank (ECB) received a request from the Ministry of Economic 

Affairs and Finance for an opinion on Article 11 of Decree-Law No 91 of 25 July 2018 on the extension of 

deadlines for popolari banks and cooperative banking groups (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 sixth indent of Article 2(1) of Council Decision 98/415/EC 1, as 

the Decree-Law relates to 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 

The  Decree-Law  introduces  amendments  to  Decree-Law  No  3  of  24  January  2015  on  the  reform  of 
popolari banks2 (hereinafter ‘Decree-Law 3/2015’) and to Decree-Law No 18 of 14 February 2016 on the 
reform  of  cooperative  banks3  (hereinafter  ‘Decree-Law  18/2016’),  in  order  to  extend  the  deadlines 

provided  for  in  those  laws.  In  addition,  it  introduces  amendments  to  Legislative  Decree  No  385  of 
1 September 19934 (hereinafter the ‘Consolidated Law on Banking’) that seek to (a) increase cooperative 

banks’  holdings  in  the  capital  of  their  parent  companies;  (b)  enhance  the  local  character  and 

decentralised  features  of  cooperative  banking  groups;  (c)  set  a  mandatory  proportion  of  the  board  of 

directors  to  be  appointed  by  cooperative  banks  (half  plus  two  of  the  overall  number  of  directors);  and 

(d) provide cooperative banks that have a lower risk profile with greater autonomy. 

1  

2  

3  

4  

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). 
Decreto Legge 24 gennaio 2015, no. 3 “Misure urgenti per il sistema bancario e gli investimenti” (GU Serie Generale 
no 19 of 24-01-2015), converted into law by Legge 24 marzo 2015, no. 33 “Conversione in legge, con modificazioni, 
del decreto-legge 24 gennaio 2015, n. 3, recante misure urgenti per il sistema bancario e gli investimenti” (GU Serie 
Generale no 70 of 25-03-2015 – Suppl. Ordinario no 15). 
Decreto Legge 14 febbraio 2016, no. 18 “Misure urgenti concernenti la riforma delle banche di credito cooperativo, la 
garanzia  sulla  cartolarizzazione  delle  sofferenze,  il  regime  fiscale  relativo  alle  procedure  di  crisi  e  la  gestione 
collettiva  del  risparmio” (GU  Serie  Generale  n.37  of  15-2-2016  ),  converted  into  law  by  Legge  8  aprile  2016  n.  49 
“Conversione  in  legge,  con  modificazioni,  del  decreto-legge  14  febbraio  2016,  n.  18,  recante  misure  urgenti 
concernenti  la  riforma  delle  banche  di  credito  cooperativo,  la  garanzia  sulla  cartolarizzazione  delle  sofferenze,  il 
regime fiscale relativo alle procedure di crisi e la gestione collettiva del risparmio” (GU Serie Generale no 87 of 14-
04-2016). 
Decreto  Legislativo  1  settembre  1993,  n.  385  “Testo  unico  delle  leggi  in  materia  bancaria  e  creditizia”  (GU  Serie 
Generale n.230 of 30-9-1993 - Suppl. Ordinario n. 92). 

 
 
 
 
                                                 
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1.1  Extension of deadlines for popolari banks and cooperative banking groups 

1.1.1  Pursuant  to  Article  2(1)  of  Decree-Law  3/2015,  popolari  banks  with  assets  of  more  than 

EUR 8 billion are obliged either to convert to joint-stock companies, wind up, or reduce their assets 

below that threshold within 18 months from the entry into force of the Banca d’Italia implementing 

measures  adopted  pursuant  to  Article  29  of  the  Consolidated  Law  on  Banking.  The  Decree-Law 

postpones this deadline to 31 December 2018. 

1.1.2  Pursuant  to  Article  2(1)  and  (2)  of  Decree-Law  18/2016,  a  cohesion  contract  is  to  be  concluded 

among  cooperative  banks  and  the  parent  company  within  90  days  from  the  date  on  which 

authorisation  is  received  from  the  competent  authority  allowing  the  creation  of  a  cooperative 

banking  group.  Subsequently,  within  90  days  from  entering  the  cooperative  banking  group  in  the 

Italian company register, additional individual cooperative banks may request to sign the cohesion 

contract on the same conditions as the initial signatories. The Decree-Law extends both deadlines 

to 180 days.  

1.2  Governance issues 

The Decree-Law amends Article 37-bis of the Consolidated Law on Banking, with reference to the 

regime  applicable  to  cooperative  banking  groups.  In  particular,  it  provides  for  the  minimum 

shareholding in a cooperative parent company held by cooperative banks to be increased to 60 %. 

In addition, it provides that cooperative banks are to be represented on the board of directors of the 

parent company of the cooperative banking group being assigned half of the total number of seats 

available, plus an additional two seats (on the basis of the ‘half plus two’ rule).  

1.3  Enhancement of the decentralised features of the cooperative banking group      

The Decree-Law introduces a new paragraph 3-bis into Article 37-bis of the Consolidated Law on 

Banking.  In  particular,  it  increases  the  participation  of  individual  cooperative  banks  in  the 

formulation of the group’s strategic and operational plan by means of compulsory consultations to 

take  place  at  ‘territorial  meetings’,  which  are  held  at  local  level.  In  addition,  it  allows  cooperative 

banks with a lower risk profile (a) to autonomously define their strategic and operational plans, in 

line  with  objectives  and  methodologies  set  by  the  parent  company;  and  (b)  to  autonomously 

nominate members of their boards of directors and, in the event that the parent company disagrees 

with  these  nominations,  to  present  a  list  of  three  alternative  candidates  from  which  the  parent 

company may choose one. 

2. 

The appropriate time to consult the ECB 

2.1  The  ECB  must  be  consulted  at  an  appropriate  stage  in  the  legislative  process.  This  should  be  a 

time that enables the ECB to adopt its opinion in all required language versions and that enables 

the  authority  initiating  the  legislative  provision  to  take  the  ECB’s  opinion  into  account  before  it 
decides on the substance 5. 

2.2 

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  to  Parliament  for 

5  

See European Central Bank, Guide to consultation of the  European Central Bank by national  authorities regarding 
draft legislative provisions (October 2015), pp. 21-22, available on the ECB’s website at www.ecb.europa.eu. 

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conversion  into  law.  If  not  converted  within  60  days  of  publication,  the  decree-law  is  rendered 

invalid  with  retroactive  application.  In  the  light  of  the  above,  the  ECB  should  be  consulted  before 
the adoption of a decree-law6. 

3. 

Observations  

3.1  With reference to the extension of the deadline set under Article 2(1) of Decree-Law 3/2015 for the 

transformation of popolari banks into joint-stock companies, the ECB understands that the need for 

this  extension  is  based  on  the  constitutional  review  of  Decree-Law  3/2015,  which  has  now  been 

concluded.  In  particular,  the  original  deadline  was  suspended  by  the  Italian  Council  of  State, 

pending a decision of the Italian Constitutional Court. As a result of the constitutionality of Decree-

Law  3/2015  having  been  upheld  by  the  Italian  Constitutional  Court  in  Decision  No  99  of 
21 March 2018  (Decision  99/2018) 7,  and  following  an  upcoming  assessment  by  the  Council  of 

State, time will start running again in relation to the deadline. At that point, popolari banks will have 

less than two weeks to call an extraordinary general meeting and vote on their transformation into 

joint-stock companies.  

3.2  Against  this  background,  the  postponement  of  the  deadline  to  31  December  2018  seems 

reasonable, as this will allow popolari banks that have not yet complied with Article 2(1) of Decree-

Law 18/2016 to do so  within a feasible timeframe. Nonetheless, it is noted that  Decision 99/2018 

upheld  the  constitutionality  of  Decree-Law  3/2015  in  allowing  cooperative  banks  to  limit,  even  in 

full,  the  right  of  shareholders  to  have  their  shares  redeemed  in  case  of  withdrawal  from  the 

company  when  this  limitation  is  necessary  to  meet  the  own  funds  requirements.  For  this  reason, 

from a prudential perspective,  the  extension  of this deadline should not be construed as allowing 

the  postponement  of  the  adoption  by  popolari  banks  of  any  measures  necessary  for  their 

transformation into joint-stock companies. 

3.3  With reference to the extension of the deadlines set under Article 2(1) of Decree-Law 18/2016 for 

the conclusion and signature of the cohesion contract, the ECB  would like to underscore that the 

swift  adaptation  of  individual  cooperative  banks  and  their  integration  within  cooperative  banking 

groups as one of the foremost objectives of the reform should be preserved. The ECB notes that 

the  establishment  of  each  group  has  already  been  authorised  by  the  competent  authorities, 

triggering the start of the 180-day period within which the cooperative banks would be required to 

sign the cohesion contract.  

3.4  With reference to the mandatory proportion of directors on the boards of parent companies that are 

appointed by individual cooperative banks of the group and the increase in the shareholdings in the 

parent companies owned  by those individual cooperative banks, the ECB understands that these 

amendments  strengthen  the  position  of  individual  cooperative  banks  within  cooperative  banking 

groups in line with article 45 of the Italian Constitution.  

6  

7  

See  paragraph  2  of  Opinion  CON/2012/64.  All  ECB  opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu. 

Sentenza 99/2018 (ECLI:IT:COST:2018:99). 

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3.5  As previously noted by the ECB 8, the reform of Italian cooperative banks and the consolidation of 

individual cooperative  banks within banking groups are important to  address the vulnerabilities of 

the  Italian  cooperative  banking  sector,  in  particular  its  capacity  to  absorb  negative  shocks  and  to 

provide opportunities for enhanced efficiency and diversification of investments. For this reason, it 

should be ensured that the fundamental objectives of the reform of the cooperative banking sector, 

namely  modernising  and  improving  the  business  model  utilised  in  the  cooperative  sector  and 

enabling parent companies to gain access to capital markets, are not affected.  

3.6  Moreover, with regard to the increase to 60 % of the minimum shareholding in cooperative parent 

companies that must at least be held by cooperative banks, the ECB understands that the power 

entrusted to the Italian Prime Minister to lower this threshold for the interest of financial stability will 

be effectively used in case of need. 

3.7  As previously noted by the ECB 9, a parent company’s powers to manage affiliated institutions and 

coordinate  the  cooperative  banking  group  is  key  to  the  success  of  the  reform.  In  this  regard,  it 

should be ensured that the obligation for parent companies to consult individual cooperative banks 

on  the  definition  of  the  group  strategic  and  operational  plan  does  not  have  an  impact  on  the 

exercise by the parent companies of the powers of direction and coordination.  

3.8  Overall, the ECB is of the opinion that the amendments to the current legislation introduced by the 

Decree-Law  should  be  consistent  with  the  objectives  of  the  reform  of  the  cooperative  banking 

sector as introduced by Decree-Law 18/2016. 

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

Done at Frankfurt am Main, 11 September 2018. 

[signed] 

The President of the ECB 

Mario DRAGHI 

8  
9  

See paragraph 3.1.3 of Opinion CON/2016/17. 

See paragraph 3.1.5 of Opinion CON/2016/17. 

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