Table of contents
Top stories
The Liquidity Decree is converted into law
Following the conversion of the “Liquidity Decree” into law, (i) the threshold for loans granted to SMEs with a 100% public guarantee has been raised to EUR 30,000, (ii) the system of State guarantees for enterprises has been extended to the assignment of credit with recourse granted to banks and financial intermediaries after the entry into force of the same law, and (iii) the so-called “golden power” and the possibility of public intervention in strategic enterprises has been strengthened.
Relaunch Decree: incentives for stock capital increases
By means of the “Relaunch Decree”, Italian companies, as well as European companies and cooperatives with registered office in Italy have been granted, upon approval of their financial statements as of 31st December 2020, a 50% tax credit for losses exceeding 10% of the net capital, gross of the same losses and up to 30% of the stock capital increase.
Law Decree no. 34 of 19th May 2020 (published in the Official Gazette no. 128 of 19th May 2020).
Main EU and Italian law provisions issued on the wake of the health emergency
- IOSCO Statement (i) inviting issuers to disclose clear and transparent information to investors and other stakeholders regarding the impact of the health emergency on their operating performance, financial position and future prospects, and (ii) requiring auditors to report on key audit matters, including a description of how they addressed these matters.
IOSCO Statement on “Importance of Disclosure about COVID-19” of 29th May 2020.
- ESMA Public Statement requiring issuers to provide, when preparing half-yearly financial reports, updated information on the main risks to which they are exposed, as well as on the activities undertaken to mitigate the impact of the health emergency on their performance.
- ECB Opinion on a proposal to amend CRR and CRR II, aimed at enhancing the European banking system’s capacity to mitigate the economic impact of the health emergency, support economic recovery and maintain a consistent prudential supervisory framework. The proposal concerns, inter alia, the treatment of publicly guaranteed loans under the NPE prudential backstop, the exclusion of certain exposures from the calculation of the leverage ratio, as well as changes in capital requirements for market risk.
- European Commission Communication setting out the criteria under EU law on State aid, based on which EU Member States may provide public support in the form of equity and/or hybrid capital instruments to undertakings facing financial difficulties due to the COVID-19 outbreak.
- BoI Communication, setting forth capital requirement measures to facilitate the activity of supervised banks and non-bank intermediaries, including the use of flexibility margins (such as the granting of a transitional period in the event of failure in order to comply with the MREL requirement).
Corporate/Laws of contract
The pactum fiduciae of quotas/shares does not draft in writing
The so-called pactum fiduciae having as object the assignment of quotas/shares does not involve the transfer of real estate rights by the assignor to the assignee, with the result that it does neither have to be drafted in writing under penalty of nullity nor be evidenced in writing.
Civil Court of Cassation, Sec. I, decision no. 9139 of 19th May 2020.
Banking law
The obstacles to the provision of TPPs’ services under PSD2
Pending the revision of PSD2, EBA has recently clarified the obstacles to clients’ access to the services provided by TPP: (i) manually inputting the account number/IBAN by the client into the ASPSP’s domain, (ii) additional checks on the client’s consent, (iii) ASPSP’s interface, as well as (iv) the mandatory redirection at the point-of-sale.
Guidelines on loan origination and monitoring
To ensure a fair management and monitoring of credit risk, as well as an adequate client protection, EBA has recently published guidelines (which will enter into application from 30th June) on governance and internal control, as well as on requirements and procedures for assessing creditworthiness of borrowers, movable and immovable property and collateral.
EBA’s Final Report of 29th May 2020 “Guidelines on loan origination and monitoring”.
Update of ESMA Q&A on securitisations
To promote common, uniform and consistent supervisory approaches and practices in the application of the EU Securitisation Regulation, ESMA has updated its Q&A, clarifying the European Commission’s draft regulatory and implementing technical standards on completing disclosure templates and data repositories.
ESMA, Update of 28th May 2020, “Questions and Answers on the Securitisation Regulation”.
Amendments to BoI’s supervisory provisions for financial intermediaries
The BoI has recently launched a public consultation on a some amendments to its supervisory provisions for financial intermediaries, which include the extension to the latter of the new definition of “default”, as well as the provisions on own funds, credit risk, consolidation methods and transitional regulation introduced by CRR 2, the revision of the limit on the holding of real estate and equity investments, and the application of EBA’s Guidelines on high risk exposures.
BoI’s Governor’s concluding remarks
According to the BoI’s Governor, Mr. Ignazio Visco, the health emergency will produce a strong contraction of the Italian economy, with the consequence that a growth path, necessary for the recovery of the European economy, will only be possible through increased employment, investment and productivity. Moreover, Mr. Visco has encouraged the use of digital solutions in the financial intermediation sector and announced the creation of a European digital innovation hub in Milan.
BoI’s Governor’s Concluding Remarks of 29th May 2020.
Bank’s liability for abusive ATM withdrawal
In case of abusive ATM withdrawal, the bank, which must ensure a technical diligence of the shrewd banker, will be held responsible if it fails to prove that the transaction at issue can be traced back to the client in question.
Financial law
ESMA supervisory instructions on the supervision of costs in UCITS and AIFs
To reduce regulatory arbitrage among NCAs, ESMA has recently issued some guidelines for cost supervision activities applicable to UCITS and AIFs, proposing to require management companies to constantly develop and monitor a structured pricing process and that, in case of excessive costs, each NCA should provide for investor compensation fee, reduction, review of disclosure documents and communication of good and poor practices.
ESMA’s Supervisory briefing on the supervision of costs in UCITS and AIFs of 4th June 2020.
New ESMA’s Guidelines on compliance function
ESMA has recently published some guidelines on the requirements to be satisfied by compliance officers under MiFID II, which provide clarifications on product governance responsibilities and strengthen the reporting requirements already provided for such function.
Annual speech of Consob’s Chairman to the financial market
In his annual speech to the financial market, Consob’s Chairman, Mr. Paolo Savona, has pointed out that is necessary to define and implement a new institutional structure, which takes into account the relationship between policies and market behaviors, targeting them towards income and employment growth. To this end, he has proposed to set up a public council, which will be responsible for defining – in a year’ time – an operational document aimed at creating the above new institutional architecture, based on a common information base and the use of scientific methods suitable for strengthening the fight to crime.
Amendment of the current provisions on reserved AIFs
The MEF has recently launched a public consultation (that will end on 3rd July) on a proposed amendment to the regulation implementing the Consolidated Financial Act on the determination of the general criteria to be met by UCIs. Among the main novelties, the minimum threshold for investing in reserved Italian AIFs, the concentration limit, the composition of the equity portfolio, as well as the portfolio management contract.
BoI’s implementation of EBA’s Guidelines on interest rate risk management and stress testing
BoI has recently implemented EBA’s guidelines on the management of interest rate risk arising from non-trading book activities, which have as object the systems that banks and investment firms must implement to identify, assess and manage the interest rate risk of the “banking book”, as well as stress tests concerning common organisational requirements, methodologies and processes for their execution.
Consob’s Chairman’s parliamentary hearing on the current situation of the financial markets
The Consob’s Chairman has recently attended an informal hearing before the Parliamentary Commission of inquiry on the banking and financial system, by intervening on the current situation of the financial markets following the economic and financial crisis due to the health emergency. Mr. Savona has said to be in favor of Cura Italia and Liquidity Decrees, which are aimed at satisfying the need for liquidity and support to SMEs. He has also highlighted the need, on the one hand, to test FinTech methods for the granting of credit, while, on the other hand, to strengthen the protection of savings.
On the asset manager’s liability
An asset manager may be held liable for damages deriving from holding in an investment portfolio previously purchased securities, unless he/she proves that such conduct complies with the investment objectives indicated by the investor in question, taking also into account the changed market scenario.
Civil Court of Cassation, Sec. I, order no. 9024 of 15th May 2020 (text available in Italian only).
The benchmark must be provided in writing
In a portfolio management contract, the benchmark must be draft in writing, since it is an essential element of such agreement that defines the maximum risk to which the managed client intends to expose himself/herself.
Civil Court of Cassation, Sec. I, order no. 9025 of 15th May 2020 (text available in Italian only).
Losses deriving from a unit-linked policy
The underwriter of a unit-linked insurance policy cannot obtain any compensation for the losses suffered unless he/she proves that the false representation of the real value of the policy in question has influenced his/her investment choices.
Breach of disclosure obligations
In case of placement of financial products issued by an asset management company on the basis of a public offer, the simply delivery of the related prospectus is not sufficient per se to meet all the intermediary’s disclosure obligations regarding characteristics and risks of such products.
Civil Court of Cassation, Sec I, decision no. 9640 of 22nd May 2020.
Financial services/FinTech
Public consultation on ESMA guidelines on outsourcing to cloud service providers
ESMA has recently launched a public consultation (that will end on 1st September, next) concerning draft guidelines on outsourcing of cloud service, having as object: (i) governance, documentation and supervisory and monitoring mechanisms, (ii) assessment procedure and due diligence, (iii) minimum elements of the outsourcing and sub-sourcing agreement, and (iv) reporting to NCAs and supervisory activities.
Compliance
Legislative Decree no. 231/2001
The role of the 231 Surveillance Committee in the health emergency according to the entrepreneurs’ national association
In the wake of the health emergency, the 231 Surveillance Committee must strengthen its supervision on the correct and effective implementation of the organisational model pursuant to the Decree 231, as well as on the actual measures taken by the employer in compliance with the emergency legislation. The Committee must interact, to this end, with the company’s top management, as well as with the relevant business functions, and the emergency committee set up for the occasion.
Data protection
The role of the 231 Surveillance Committee in the data processing
The Data Protection Authority has recently clarified that the 231 Surveillance Committee, as “part of the legal entity”, cannot be considered either as a data controller or as a data processor of such entity. Therefore, the data controller must designate each member of the 231 Surveillance Committee as “authorised” parties, with the consequence that the latter will have to follow the instructions provided to them by the data controller with regard to the data processing in question.
Data Protection Authority, “Opinion on the subjective qualification for privacy purposes of the Surveillance Committees referred to in Article 6 of Legislative Decree no. 231 of 8th June 2001” of 12th May 2020 (text available in Italian only).
Anti-money laundering
The new European Commission’s AML Action Plan
The European Commission has recently launched a public consultation (that will end on 29th July) on a draft AML Action Plan to be adopted over the next 12 months, to improve implementation, supervision and coordination of EU AML provisions. The Plan builds on six pillars: effective implementation of existing EU rules, a single EU rulebook, EU-level supervision, the establishment of a support and coordination mechanism for EU Member States’ financial intelligence units, better use of information to enforce criminal law, and an enhanced role of the EU at global level.
Procedural law
The postponement of the hearing scheduled for the specification of parties’ final conclusions due to the health emergency
According to the “Cura Italia” Decree, the hearing scheduled for the specification of the parties’ final conclusions may be postponed due to the health emergency, with the consequent scheduling of a new hearing for the written discussion.
Court of Bologna, order of 6th May 2020.
List of abbreviations
AIFs: Alternative Investment Funds
AML: Anti-money laundering
ASPSP: Account Servicing Payment Service Providers
BoI: Bank of Italy
CONSOB: The national financial markets Authority
Consolidated Financial Act: Legislative Decree no. 58 of 24th February 1998
CRR: Regulation (EU) no. 575/2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012
CRR II: Regulation (EU) no. 2019/876 amending Regulation (EU) No 575/2013 as regards the leverage ratio, the net stable funding ratio, requirements for own funds and eligible liabilities, counterparty credit risk, market risk, exposures to central counterparties, exposures to collective investment undertakings, large exposures, reporting and disclosure requirements, and Regulation (EU) No 648/2012
Decree 231: Legislative Decree no. 231 of 8th June 2001
DLT: Distributed Ledger Technology
EBA: European Banking Authority
ECB: European Central Bank
ESMA: European and Securities Market Authority
EU Securitisation Regulation: Regulation (EU) no. 2017/2402 laying down a general framework for securitisation and creating a specific framework for simple, transparent and standardised securitisation, and amending Directives 2009/65/EC, 2009/138/EC and 2011/61/EU and Regulations (EC) no. 1060/2009 and (EU) no. 648/2012
IOSCO: International Organization of Securities Commissions
MEF: Ministry of Economic and Finance
MIFID II: Directive 2014/65/EU on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/E
MREL: Minimum Requirement for own funds and Eligible Liabilities
NCAs: National Competent supervisory Authorities
NPEs: Non-Performing Exposures
PSD2: Directive no. 2015/2366/EU on payment services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 1093/2010, and repealing Directive 2007/64/EC
SMEs: Small and Medium Enterprises
TPP: Third-Party Provider
UCIs: Undertakings for Collective Investment
UCITS: Undertakings for the Collective Investment in Transferable Securities