New rules are coming banking foundations. The Ministry of the Economy and ACRI, the association representing the Foundations, have approved the protocol which will lead to a reduction of their presence in the banks to no more than a third of the capital over a period estimated between three and five years. This is the main novelty that will closely affect credit giants such as Intesa San Paolo e Unicredit but other innovations are included in the agreement: reduction of debts up to their cancellation and limits on mandates.
What are the new parameters and what effects could they produce?
The protocol indicates to the banking foundations of diversify the loan portfolio of assets, in order to limit the concentration of risk and the dependence of the management result on certain issuers, groups of companies, business sectors and geographical areas. There is a quantitative limit of one third of the balance sheet assets for exposure to a single person.
Furthermore, the protocol underlines the need to avoid, in compliance with the principle of heritage conservation, any form of debt except in the case of temporary and limited liquidity needs and also not to use contracts and derivative financial instruments except for hedging purposes or in operations in which there is no risk of capital losses.
What does it mean and what could be the effects?
This will lead several foundations to lower the investment threshold for a single bank below 33,3%. It is the case of some shareholder foundations of Intesa and Unicredit which will have to dispose of part of their shares.
For example, among the shareholders of UniCredit there is la Cariverona Foundation which owns 3,46% of the bank. This share accounts for 49% of the foundation's total investments. Same "problem" for the Saint Paul Company, the leading shareholder of the Intesa SanPaolo bank with 9,51%. However, this commitment in Intesa SanPaolo (related to the end of 2013) accounts for 48% of the bank's investment on the total. Similar speech also for the Foundation Cariparo which at the end of 2013 saw an incidence of its 4,45% stake in Intesa on the total invested of approximately 64%.
The three foundations we have just talked about will have to fall within the limits indicated by the protocol within three years or five years, depending on whether the investment is in a listed or unlisted company.
The protocol also provides for other very interesting news on the side of the governance of banking foundations. Among these stands out the compensation limit. For example, in the case of foundations with assets exceeding one billion euros, the annual remuneration of the president of the foundation cannot exceed the maximum 240mila euros. There are caps based on the assets, for the overall fees paid to all the members of the bodies.
Among the other important innovations it is necessary to highlight the rules related to time limits for assignments. The duration of the management and guidance bodies of the foundations will be a maximum of 4 years and the offices of president and councilor cannot be held for more than two consecutive terms. Finally, the protocol underlines the need to adopt appointment procedures aimed at balancing gender representation.
“The Protocol – commented Giuseppe Guzzetti, president of ACRI – is a further step in the process of self-reform of the Foundations and was wanted by the Mef and Acri in the wake of the law that regulates them (Ciampi reform of 1998/99 and subsequent amendments) according to the changed historical, economic and financial context, from which emerges the need to specify the scope of application of the rules governing foundations of banking origin, so that they can express themselves ever more fully as subjects of the third sector".
"ACRE - Guzzetti also said - has always contributed effectively to the pursuit of the purposes that the legislator has assigned to supervision (Mef) by promoting the dissemination of good operating practices among foundations of banking origin and the development of codes and behavioral practices , which can guide, in a shared form, the achievement of better and greater operating standards, in terms of transparency, responsibility and pursuit of statutory interests, as attested by the Charter of Foundations launched by the Association in April 2012. This Protocol is in continuity , in substance, with choices already made by many Foundations, but it brings an absolute innovation in the relationship between supervisor and supervised, because it has found in dialogue and constructive comparison the ideal tool to encourage increasingly virtuous behaviors and practices, in the interest of community and the whole country".
