Abstract
Italian Credit Cooperative Banks (Banche di credito cooperativo, from here after CCBs) represent a significant part of the Italian banking system. Born in the second half of the nineteenth century, they have been able to grow and to adapt to new social, economic and legal environment. The Banking Law, which entered into force in 1993, has weakened the differences between CCBs and commercial banks with respect to the previous legislation, while preserving mutualism, democracy, localism and not-for profit goals. In this context CCBs, from being banks aimed at lending small credits to local farmers and handcrafts in rural areas where they were in most case the only banking institution, have become able to compete with commercial banks on wider areas. One of the main contribution to this evolution has been given by the second level networks—i.e. the banking and the association networks that help single cooperative banks to increase efficiency and to be competitive on the banking market. With respect to other European cooperative banks, however, the Italian system is at present among the least integrated. During the financial turmoil started in 2007, Italian CCBs kept on financing local economies, not without relevant costs, particularly in terms of non-performing loans; the number of CCBs under default procedure has increased. Today a debate is in place for a reform of the network, to give rise to a more integrated system, based on membership of banking groups.
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Notes
- 1.
By changing the name, the legislator wanted to put the accent on the “cooperative” character of this type of banks, instead of stressing the sectors with which they were allowed to work, as it was with the previous name (“Casse rurali e artigiane”—Rural and Handcrafts Banks). According to the 1937 legislation, 80 % of members had to be farmers or craftsmen. Moreover, body corporates could not become members.
- 2.
The establishment of a new branch is liberalised in the sense that, like for the other categories of banks, it no longer requires a Bank of Italy’s authorization. The intention to open a new branch must be communicated to the Supervisory Authority and the branch can be opened unless the Bank of Italy prevents it within 60 days from the communication. The opening of a new branch can be stopped when the Bank of Italy considers the organization of the bank not adequate, or because of its economic, capital o financial situation. The local character of CCBs implies however that a new branch can be opened only in municipalities that are included in the “competence area” (see below in this Section). An exception to this rule is the case of a “secondary headquarter”, which can be opened under stricter conditions (see, “Istruzioni di Vigilanza per le Banche”, Title VII, Chap. I).
- 3.
The 2003 Company Law Reform (Law 6/2003) introduced the distinction between “mutualism prevailing cooperatives” and “non-mutualism prevailing cooperatives” and allowed, among other things, a favourable tax treatment only to the former. Because of the compulsory “mutuality” requirement, all CCBs are by law “mutualism prevailing cooperatives”. As the other cooperatives of the same kind, they are under the supervision of a special authority for cooperatives, whose aims are different from the ones of the Bank of Italy and cannot be in contrast with them.
- 4.
The Bank of Italy’s supervisory regulation concerning CCBs is contained in the Circolare n. 229 “Istruzioni di Vigilanza per le Banche”, Title VII, Chap. I.
- 5.
No mutual requirement is set for the funding activity or the provision of financial services.
- 6.
Considering the 15 areas which coincide with the competence of local Federations, over the 2004–2011 period, loans to members have been on average over the 50 % requirement only in Alto Adige, Abruzzo-Molise, Tuscany, Piedmont-Valle d’Aosta-Liguria and Trentino, while in the other areas the supervisory requirement have been on average fulfilled thanks to investments in government bonds.
- 7.
A “discontinuous” competence area is allowed when CCBs merge with other CCBs whose reference area is not contiguous and in the case of a “secondary headquarter” (see footnote 3).
- 8.
The amount of business activity referring to outside the competence area cannot exceed 5 % of total.
- 9.
The present maximum value is 50,000 of euros, according to Bank of Italy’s regulation.
- 10.
Moreover, as members do not receive any dividend (see below in this Section), the only plausible reason to hold more than one share is to support the existence of the cooperative bank.
- 11.
In case of distribution to members of remaining profits, according to art. 2514 of the Italian Civil Code, CCBs cannot distribute dividends superior to the maximum interest on postal bonds increased by 2.5 %. In practice, CCB profit distribution policies, beyond mandatory reserves, devote an additional fraction of profits to charity so that in most cases members do not receive any profit. Membership is therefore not motivated by profit earning, but rather by expectation of better credit conditions, less costly financial services and higher credit availability (Di Salvo and Schena 1998).
- 12.
The three Central Cooperative Banks are ICCREA (whose headquarter is in Rome), Cassa Centrale Banca—Credito Cooperativo del Nord Est (whose headquarter is in Trento) and Cassa Centrale Raiffeisen dell’Alto Adige (established in Bolzano). All three banks are limited companies which offer financial services to CCBs, directly or through companies of their groups. ICCREA, in particular, is a holding company—owned by the cooperative banks, the national Federation (Federcasse), the regional Federations, the Central Banks of Trento and of Bolzano—which operates through its members’ companies: ICCREA Bank spa (the central Institute built in 1963 with its six branches), Agrileasing created in 1977, Aureo Gestioni spa, IMMICRA spa, Simcasse spa, Assimoco spa and Assimoco Vita spa, Ciscra spa, and SEF srl.
- 13.
An analogous fund therefore exists for the other Italian banks.
- 14.
Italian Banche popolari are the only case of cooperative banks in Europe that does not have cross-guarantee schemes beyond the compulsory deposit insurance schemes (Ayadi et al. 2010).
- 15.
See the Law 24.3.2015, n. 33.
- 16.
This term is valid for Banche popolari having more than 8 billion euros of assets at the moment when the law entered into force; for future cases of Banche popolari overpassing the threshold term for transformation is 12 months. Majorities for the decision are the ones described in the following footnote.
- 17.
The maximum number of proxies in meetings that Statutes have to fix must be increased: it must be a number in between 10 and 20. Moreover, according to the new discipline, Statutes have to be revised also as for the number of members required for the validity of meetings deciding on the transformation of a Banca popolare into a limited company: more precisely the new law requires that meetings are legally valid if one tenth of members are present at the first call (instead of one third). For the second call no quorum has to be achieved. In both calls a decision is reached with the majority of two thirds of the members who are present.
- 18.
Actually, as mentioned, this transformation has been made easier by the recent law that has reduced the quorum required for this decision by the general assembly.
- 19.
According to the BL, Italian banks can be divided into four legal forms: (1) Banche spa (Limited Company Banks); (2) Banche popolari; (3) Banche di credito cooperativo (Credit Cooperative Banks, also called Mutual Banks); and (4) Filiali di banche estere (Branches of Foreign Banks). At the end of 2014 the Italian banking industry accounted for 171 Limited Company Banks, 37 Banche popolari, 376 Credit Cooperative Banks and 80 Branches of Foreign Banks (Banca d'Italia, online statistics, 2015).
- 20.
From 1999 to 2014 the number of CCBs decreased by 29.2 %, while the total number of banks decreased by 24.1 %.
- 21.
In particular, from 1999 to 2014 the number of CCBs branches has increased by 54.8 %, against a rise by 13.2 % of total banks. The number of CCBs’ branches increased also during the crisis (13 %) while the total number of bank branch decreased (−7.5%).
- 22.
The number of CCBs’ employees increased also during the crisis, by 8.2 % between the end of 2007 and the end of 2014 while in the same period the number of employees of the banking system decreased.
- 23.
Data on market shares on loans include the three Central Banks of the credit cooperative system.
- 24.
In this paper the expression SMEs refers to either sole-proprietorships or firms (different from limited companies) with less than 20 employees, according to the definition followed in the Bank of Italy’s Supervisory Reports.
- 25.
Banca d’Italia, Annual Report, Statistical Appendix, various years.
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Appendix: Tables and Figures
Appendix: Tables and Figures
Credit Cooperative Banks’ branches by region (Ratio between the number of branches of Credit Cooperative Banks in the region and total bank branches) (percentage values). Source: Bank of Italy, online statistics
Banks and branches (1999–2014) (index numbers; 1999 = 100). Source: Bank of Italy
Credit Cooperative Banks’ market share on loans to households and firms (1999–2014) (The market share is computed on loans including non-performing loans) (percentage values). Source: Bank of Italy, Supervisory reports
Credit cooperative banks’ market shares by sectors (1999–2014) (The market share is computed on loans including non-performing loans) (percentage values). Source: Bank of Italy, Supervisory reports
Loans to firms (Loans include non-performing loans) (monthly rate of growth on yearly basis; percentage values). Source: Bank of Italy, Supervisory reports
Loans to households (Loans include non-performing loans) (monthly rate of growth on yearly basis; percentage values). Source: Bank of Italy, Supervisory reports
Credit cooperative banks: new defaulted loans (Ratio between the flow of new defaulted (bad) total loans over outstanding loans) (monthly data; percentage values). Source: Bank of Italy, Supervisory reports
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Catturani, I., Stefani, M.L. (2016). Italian Credit Cooperative Banks. In: Karafolas, S. (eds) Credit Cooperative Institutions in European Countries. Contributions to Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-28784-3_8
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