The letter that the Cooperative Credit Banks and their institutions have recently received from the Bank of Italy is the signal that time has definitely run out, that is, that the Cooperative Credit reform must pass from words, many, confusing and confused, to facts, with precise deadlines, clear methods of proceeding, non-negotiable indications.
As is known, talks of the reform of cooperative credit had begun many months before January 2016, the date of issue of the government decree, which left room for self-reforming solutions. Now the conclusion of the process for starting up the new structure must take place no later than April 2018!
I leave out any comments on the issue of urgency, as well as the deterioration of the system in this long gestation period of change, with the hope that no further failures will occur. In the meantime, however, the temporary but mandatory Interbank Fund of Cooperative Credit, wanted by the reform law to buffer other probable crises, through mergers, has practically exhausted the 400 million allocated, as well as being a source of conflict, for some intervention accused of favoritism , without not all critical cases being resolved.
However, I return to the failure of the unitary solution of the cooperative banking group and to the fear that a battle in the name of proselytism could break out between the two groups in formation, the one headed by Iccrea and that of Cassa Centrale Trentina, which would tear even more the already frayed cooperative fabric.
The Bank of Italy noticed this and ran for cover as far as possible, recalling in the above letter the ban on competition, based on the promise of greater management autonomy, because the rules of the cohesion contract must be the same for everyone . Cherry picking, au reverse, is also prohibited, rejecting requests for membership from banks in critical conditions. The principle of solidarity, as the Bank of Italy had to remind the cooperative movement, must remain the guiding star of the reconfiguration of the system.
But some doubts remain, reading in the press the news of the subscription by Cassa Centrale Trentina and its IT services company (one might wonder, the latter in what capacity and with what impact on the prices of the services sold and on the investment capacity in technology) of 20 million of subordinated bonds issued by Chiantibanca, which, at the last plunge, abandoned the path of transformation into a joint-stock company to rejoin the ranks of the Tridentine group. This is an operation which, signaling financial difficulties, will hardly make the Tuscan bank one of the most virtuous and therefore deserving of a greater degree of managerial independence. But there was still a need for a champion in that group and so it was.
From this point of view, the condition of the Iccrea group should be better, which ranks the CCB of Rome at the top of the pyramid and immediately after some large CCBs in the North, with adequate technical profiles, which should ensure them the greatest possible managerial space, also rewarding the ability to provide any support from other affiliates.
The final count will take place within this month of January, the peremptory deadline for registering for one or the other side. And, on closer inspection, one of the first negative effects of the division into two cooperative banking groups is that it undermines the insurance cornerstone of mutual assistance inherent in the cohesion contract, which is the law of large numbers, whereby the more you restrict the universe of application increases the cost of risk for everyone. It is trivial, but it is good to always keep it in mind, when there is an attempt to reconcile issues of stability and competition in the same unity of action.
At the time in which the individual mutual banks are classified into groups of merit and managerial independence, the two configurations will probably highlight significant differences, requiring coverage of risks to a clearly different extent.
On the other hand, while the parent company Iccrea can count on already accumulated assets of 1,7 billion, the Cassa Centrale group will have to raise, in the declared certainty of aggregating a hundred mutual banks, almost one billion to compete on an equal footing with the former, reaching 1,3/1,4 billion.
With overall profitability reduced to a minimum, as the Bank of Italy has repeatedly underlined, it will not be easy to find the missing part of the capital on the market. In any case, the consequence of the separation will be that around 3 billion of total assets will be needed, when those already held by Iccrea would be sufficient for the insurance needs of all the 330 CCBs in Italy.
This system effect should also be better explained by the Authorities, given that the resources at stake are certainly not irrelevant and it would be more than appropriate to avoid their dispersion.
Another issue will concern the fate of the numerous central bodies of an institutional nature, such as the Guarantee Funds, which perhaps will also have to be divided, further reducing the members' self-insurance capacity. In fact, it would seem difficult to hypothesize that the CBs of the two competing groups could join the same Guarantee Fund, under penalty of presumable conflict in the management of individual situations. In the future, it could be suppressed and transferred to the Interbank Deposit Protection Fund, envisaged for banks other than cooperative credit banks, to prepare for the establishment of the European Guarantee Fund. But it doesn't seem to me that this, at the moment, is a topic for reflection within the movement, even if in the meantime we will have another factor of dispersion of resources.
However, the central point to which I must return, risking the accusation of repeating myself, is the absence of information from both sides regarding their respective industrial projects, which on the one hand will have to follow paths of downsizing of the current plethoric configurations, on the other banking cooperatives with substantial innovations in the relationship with local economies.
However, nothing is known about strategies for expanding services and new ways of producing and distributing products, as well as the investments required by automation projects, as an essential integration factor.
The lack so far of an industrial soul of the reform (and therefore of differentiation in planning strategies) raises the doubt that the failure of the unitary solution has so far been due to an incurable idiosyncrasy between the leaders of the two sides, with resistance in both to support a beneficial change. The acceptance in these days of the resignation from the more than twenty-year tenure of the President of Federcasse should therefore be read as a positive sign, above all if the process initiates the separation between the associative and banking components of the movement, a requirement set as a premise by the Bank Central European Union at the end of its first inspection of the cooperative system's lead bank for management linked to criteria of greater efficiency.
We are convinced that the technical structures of both groups - which know how to properly evaluate the effects of a fragmentation such as the one that is being prepared - understand, with concern, the opportunities which are being given up, in the name of unproven advantages deriving from internal competition , which does not belong to the history of banking cooperation.
Therefore, it would not seem out of place to appeal to the management of the cooperative credit and to their professional knowledge and experience, so that a logic of technical competence prevails, given that the real game for the relaunch of the Italian cooperative credit banks will be played on this terrain. The work to be done, which will consist in rewriting the algorithms of governance and of the cooperative banking business, will be truly relevant and all the more effective the wider the network on which the stimuli for renewal will be distributed.
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