situation. for some unlisted cooperative banks, conversion into joint stock companies will be part of a broader transformation of governance also comprising stock exchange listing. these interventions will greatly enhance access to capital markets and help overcome the problems with the current process of share price determination, which the law reserves to the shareholders ’ meeting. stock exchange listing will also ensure the liquidity of the investments of shareholders who wish to dispose of their holdings. the banca popolare di vicenza is one of the cooperative banks that have embarked on this process as part of the measures required by the supervisory authorities. as the explanatory note published on our website yesterday describes in more detail, in 2014 evidence emerged that this bank had committed irregularities in share buybacks. in agreement with the new european supervisory bodies, which were about to start operating, we scheduled a targeted inspection for immediately after the european comprehensive assessment. this intervention, conducted by bank of italy inspectors as part of the single supervisory mechanism, revealed other practices not in compliance with the rules. as soon as the initial findings of the investigations begun last february started to emerge, the bank of italy and the ecb concurred fully on urging the banca popolare di vicenza to adopt immediate corrective measures. the top executives and almost all of the senior management were replaced ; a capital strengthening plan was drawn up, the success of which is ensured by the presence of an underwriting consortium ; and a radical reform of corporate governance is planned for the cooperative ’ s conversion into a joint stock company and its simultaneous stock exchange listing. a reform of the mutual banking sector is also needed now. self - financing, the main source of funds for increasing these banks ’ capital, has essentially dried up as a result of the recession. in the absence of any decisions, the necessary increase in provisions to cover bis central bankers ’ speeches non - performing loans would lead to a further reduction in the capacity for self - financing ; a significant part of the mutual banking system would incur negative evaluations by the supervisory authorities and might not be able to meet the need for a larger capital endowment. this could give rise to situations that would be difficult to manage within the new crisis resolution framework, also considering the constraints of the regulations on state aid. mutual banking systems in other euro - area countries have long since instituted highly integrated organizational structures capable of realizing economies of scale, unitary risk control mechanisms, and safety nets for the liquidity and solvency of the participating banks. some of these

accordingly, in this area the esas should involve the colleges closely, taking their cue from the structures developed in the last few years. the information centralized in databases operated by esas should enable supervisors to conduct effective peer group analyses. in addition to basic supervisory data, it could be most useful for supervisors to share the results of stress tests on the main banking groups and their consequent risk assessments. the best way to achieve this is to have the esas themselves conduct the stress tests at european level, using common scenarios and methodologies and providing for mechanisms to determine the sources of differences between single financial groups. to make this possible, access to the data must be restricted to a small group of supervisors and strict rules must be enacted to safeguard the confidentiality of such sensitive data. 3. 5 colleges of supervisors with the reform, the esas are given a central role in coordinating the activities of the colleges of supervisors. the first step should be setting standards for the functioning of the colleges based on today ’ s best practices, to enhance consistency within the union. in this regard, the two colleges instituted by banca d ’ italia for the top two italian banking groups represent an especially positive experience. rules are already in course of application establishing the legal basis for the colleges, broadening their tasks – including in crisis situations – and creating joint decision - making processes for supervisory controls, which may eventually result in specific capital requirements for the groups and for their individual components. so far, the colleges have worked well where the law is sufficiently stringent in defining their tasks, as for instance in the validation of the intermediaries ’ internal risk measurement models. the results have been less satisfactory where the functioning of colleges is based on voluntary commitments. to achieve a truly integrated system of controls on cross - border groups, in which the colleges can act as promptly and as effectively as national supervisors now do, it would be necessary to create the conditions for expanding the scope for concerted decision - making by the supervisory authorities. consideration should be given to enacting community legislation on banking groups patterned after the italian law, which recognizes the coordinating role of the parent company and institutes a clear framework for the proper attribution of rights and responsibilities to all the components of the group. the parent company could be made responsible for interacting with the college of supervisors and making sure that the latter ’ s indications are complied with by all group members. 3. 6 legislation and agreements on the management of crises in line with the recommendations of the