On 2 July 2021, Bank of Italy has updated its Supervisory Provisions (i.e. the Bank of Italy Circular no. 285/2013) with regard some aspects concerning the corporate governance of banks (the "Amendments"). The changes made, which have undergone public consultation, are intended to strengthen Italian banks' governance structures and to keep up to date with EU guidelines more effectively (in particular, EU Directive 2019/878 and EBA "Guidelines on internal governance").
In particular, the Amendments concern the main following aspects:
1. The introduction of a gender quota: there must be a minimum gender quota of at least 33% in banks' administrative and control bodies, to be implemented within different timing depending on the size of the banks. In particular:
(i) banks considered "small in size or operational complexity" ("di minori dimensioni o complessità operativa") have to provide for a reduced gender quota (of at least 20% of the members of the bank's corporate body) within the first full renewal of the relevant body carried out after 1 January 2022, and in any case by 30 June 2024. For subsequent renewals - and, in any case, no later than 30 June 2027 – they apply the "regular" gender quota (i.e. 33%);
(ii) other banks have to implement the "regular" gender quota (i.e. 33%) within the first full renewal of the relevant body carried out after 1 January 2022, and in any case by 30 June 2024.
The aim of this new rule is to increase diversity within the leadership of banks, thus increasing their effectiveness: a greater variety of approaches and perspectives in analyses and decision-making processes encourages more debate, improving strategic vision and the general running of businesses.
Banks have to adopt an internal regulation identifying the measures to pursue an adequate degree of diversification of the composition of their corporate bodies, not only in terms of gender but also of skills, experience, age, international projection;
2. New threshold for banks "small in size or operational complexity": the threshold for banks to qualify as "small in size or operational complexity" ("di minori dimensioni o complessità operativa") has raised from Euro 3.5 billions to Euro 5 billions;
3. The inclusion of new topics of strategic importance in decision-making processes: in defining corporate strategies, the body with strategic supervision function has to consider the following profiles: (i) the possible adoption of models entrepreneurial, applications, processes or new products, also with partnership modalities or outsourcing, related to the offer of technology-intensive financial services (Fintech); (ii) the objectives of sustainable finance and, in particular, the integration of environmental, social and governance factors (ESG) in the processes related to business decisions; (iii) the definition and correct implementation of funding policies, also with reference to type of interested savers/investors, including planning and choices regarding compliance of the legislation on Minimum Requirement for own funds and Eligible Liabilities (MREL);
4. The adoption of ethical standards for all personnel: the body with strategic supervision function establishes rules of professional conduct for the staff, also through a code of ethics or similar instruments, and ensures their implementation, by monitoring compliance by the staff. It also specifies the operating procedures and measures aimed at ensuring compliance with the rules of professional conduct, also by indicating prohibited behaviours (for example, use of false or inaccurate information and the commission of offenses in the financial sector or tax offenses);
5. The alignment to a specific provision of Directive 2013/36/EU (Article 88(1), paragraph 4 and 5) regarding the financing of the members of the banks' management body and their related parties: pursuant to the mentioned provision, data on loans to members of banks' management body and their related parties are properly documented and made available to competent authorities upon request.
In this regard, banking groups will have to consider whether to apply this obligation also to loans granted: (i) by a bank to the members of the management body (and their related parties) of other banks of the group and of the parent company; (ii) from other entities of the group (for example, financial companies) to the members of the management body (and their related parties) of the banks of the group and of the parent company.
Except as specified above with regard the timing for implementation of the gender quota, banks will comply with the Amendments within six months of their entry into force.
Where the internal adaptation requires statutory changes, they are made at the latest at the meeting approving the 2021 financial statements of the banks.