"To date, this Bank has not yet complied with the requests of the Supervisory Authority", which had expressed itself "for the capital increase to be carried out as soon as possible, in order to guarantee a rapid realignment of the capitalization levels with the objectives". This was written by the governor of Bank of Italy, Ignazio Visco, in a letter sent to Banca Popolare di Milano, which arrived yesterday afternoon.
The number one of Via Nazionale therefore notes that Bpm's core tier 1 remains "below the capitalization target indicated by this institution", equal to 8% (it was 7,25% at the end of September). The governor also underlines that "the rapid and positive outcome of the capital increase is called into question by the critical situation of governance of Bpm", especially as "tensions have flared up again in the Bank's top management".
Visco mentions the resignation of former managing director Piero Montani "close to the launch of the new business plan (initially scheduled for 12 November 2013 and now postponed)", the ad interim mandate assigned to Davide Croff and the convocation by the "board management, upon indication of the supervisory board", of the shareholders' meeting which will have to elect the new top management and "extend the final deadline for the execution of the capital increase to 31 July, making clear the further postponement of the capital strengthening operation" .
The convocation of the assembly came after the Bpm top management had failed to reach an agreement on the proposal for the early renewal of the mandate of the CDG to allow for Montani's replacement. "The critical issues in corporate governance - writes Visco again - undermine the intermediary's ability to develop medium-term strategic guidelines (update of the industrial plan) and to complete those already set, including the necessary capital strengthening".
Visco's findings are at the basis of the refusal opposed by Bank of Italy to the repayment and repurchase operations of hybrid instruments proposed by BPM.
