Share prices before capital increases, valuation of subordinated bonds and irregularly granted loans, supervisory skills and responsibilities. These are the points on which the Bank of Italy and Consob clashed remotely on Wednesday in an unprecedented dispute. The occasion was the second hearing of Carmelo Barbagallo, number one of the Supervision of Via Nazionale, and of Angelo Apponi, director general of Consob, before the parliamentary commission of inquiry into banking crises. At the center of the dispute, once again, the management of the instability of Veneto Banca and Pop Vicenza.
THE PRICES OF THE SHARES
Bank of Italy understands that the prices of Pop Vicenza shares have already been inflated with the inspections of 2001 and 2008, but it sends the results to the judiciary, not to Consob, and the local prosecutor files it. On Veneto Banca, the only communication sent by Via Nazionale to Consob dates back to 2013. There is talk of an inconsistent share price. Then in 2015 Bankitalia passed on to Consob an excerpt of its inspection report in which it argued that the price of Veneto Banca shares was determined on the basis of an irrational or in any case full of flaws methodology. Consob states that it would have taken other initiatives if it had had this information two years earlier. Bankitalia instead believes that already in 2013 the Commission had all the elements to act.
THE "KISSED" OPERATIONS
This term refers to loans granted to shareholders to buy shares. Operations of this type in Veneto Banca were taken over by Bank of Italy in 2013, while as regards Pop Vicenza they emerged only in 2014, with the handover to European supervision. Also in this case, between Via Nazionale and Consob there is a rebound of responsibility on the timeliness of the analysis and the ability to evaluate.
SUBORDINATED BONDS
Apponi revealed that it was not Consob that approved the prospectuses of the subordinated bonds issued by Vicenza and Veneto Banca in the winter of 2015, when the bankruptcy of the institutions was almost upon us, but "the foreign authority of a European country, as allowed the legislation being unlisted banks".
The question is central, because those bonds have been sold in full hands to retail savers, who in many cases have lost everything they had set aside in a lifetime of work. Those securities, passed off as safe investments, were in reality very high risk and the prospectus, launched by the Luxembourg authorities, was full of conflicts of interest.
To prevent similar operations from being repeated, Barbagallo suggested “prohibiting the retail placement of bonds, not only subordinated bonds, below a certain score. In some cases it is necessary to arrive at the prohibition, the prospectus is not enough. To take this provision, a law would not be needed, it would be sufficient to find an agreement with Consob ".
COMMUNICATIONS BETWEEN THE AUTHORITIES
As for the relationship between the two authorities, the head of the Supervision of Via Nazionale believes that the information exchange protocol between Bank of Italy and Consob dated 2012 is "perfectible". At the moment, the rules state that if one of the two institutes makes an inspection, it decides what to let the other know. And it is precisely this short circuit that has caused the misunderstandings regarding the Veneto banks.
Today the Bank of Italy inspections are in the dock, but in hindsight Consob has more powers than Via Nazionale, being able to order searches, telephone interceptions and hearings assisted by a lawyer. Furthermore, from 2018 the Mifid 2 directive will allow Consob to prohibit the sale of complex products.
