Banks: tightened on derivatives by Bankitalia, Consob and Ivass

Bank of Italy, Consob and IVASS have prepared a document concerning the accounting treatment of transactions consisting of the purchase of securities, a hedging derivative and a repurchase agreement (so-called 'term structured repo'), similar to the instrument ' Santorini' launched from Monte dei Paschi di Siena and ended up in the crosshairs of the judiciary. 'In particular, the Authorities deem it necessary for the administrators to carefully evaluate the purposes underlying the set of contractual agreements which constitute the 'term structured repo' operations, even if formally separate in order to evaluate the most appropriate accounting methods'. The document also draws the attention of the members of the administrative and control bodies and of the executives responsible for preparing the accounting documents to the need to guarantee adequate and complete information on the 'term structured repo' transactions in this regard the representation criteria, the impacts on the economic, equity and financial situation, also pro-forma, as well as the underlying risks and related management strategies'.