Italy Off The Hook Over The Acquisition Of Stakes In Domestic Banks

by Ulrika Lomas, for LawAndTax-News.com, Brussels

25 January 2007

The European Commission announced on Wednesday that it has decided to close an infringement procedure against Italy concerning prudential supervision of the acquisition of stakes in domestic banks.

The Commission will, however, continue to monitor the financial services sector to eliminate any possible obstacles to the free movement of capital not justifiable on prudential supervision grounds that could hinder cross-border consolidation in the EU financial sector.

The decision to close the case followed Italy's amendments to its national regulatory framework applicable to supervisory decisions on the acquisition of stakes in domestic Italian banks by other EU banks.

This was in response to the Commission's formal request to Italy to submit its observations on its national regulatory framework as part of the first phase of infringement procedures under Article 226 of the EC Treaty.

The Commission had initially been concerned that the national regulatory framework in question could allow for the exercise of supervisory authority in a way which lacks procedural transparency and can create legal uncertainty.

This could therefore act as a disincentive to investment from other Member States in the Italian banking industry, in violation of EC Treaty rules on the free movement of capital (Article 56) and the right of establishment (Article 43).

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