Italy: Financial Sector Assessment Program—Technical Note—Banking Regulation and Supervision and Bank Governance

IMF Staff Country Reports, August 4, 2020

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The note presents a targeted review of selected aspects concerning the regulation and supervision of banks in Italy and their governance framework.
The review was carried out as part of the 2019 Italy Financial Sector Assessment Program (FSAP) and was based on the regulatory framework in place and the supervisory practices employed as of March 2019.
Because regulation and supervision of significant banking institutions (SIs), including Italian SIs, was extensively covered in the 2018 Euro Area FSAP, this note focuses on the prudential regulation and supervision of less significant institutions (LSIs).
The note additionally reviewed regulatory and supervisory areas not covered by the wider EU regulatory framework—specifically the supervision of anti-money laundering and countering the financing of terrorism (AML/CFT) and related party transactions—which apply to both SIs and LSIs in Italy.

Emphasis on prudential regulation and supervision gaps and practices specific to LSIs in Italy as of March 2019.
Identification of AML/CFT supervision and related party transaction oversight as areas outside the wider EU regulatory framework that require attention and apply to both SIs and LSIs.

Anti-money laundering and combating the financing of terrorism (AML/CFT)
Bank supervision (with specific focus on LSIs)
Bank governance and ownership structure
Credit risk and risk assessment methodologies (CR; ISCR)
Liquidity risk
Operational risk
Related party transactions
Business model analysis and risk management
Special references to Italian supervisory instruments: The BdI circular, The BdI guidance, The BdI regulation, The BdI statute, The BdI supervisor, The BdI team
Mention of sector-specific institutions: popolari bank