Italy: Banking Foundations

Last Updated: 15 October 1998
A complex procedure for the privatization of the public banking system in Italy is under way and has brought about the establishment of the so called "Banking Foundation", which is composed of a foundation and of a bank.

The purpose of this Foundation is to assure the placement of state owned bank shares on the stock market in order to privatize, at least partially, the state owned banks, by temporarily controlling the totality of their shares.

The Banking Foundation is structured in such a way that permits it to achieve its purpose. The Foundation is the owner of the bank and the bank in turn has a purely instrumental role in attaining the aims and social programs of the Foundation characterised as non profit.

Specifically, the structure is formed from two distinct subjects that in certain respects serve two distinct purposes:

(i) the bank which functions as a company, carries out profit oriented bank activity, must effectively engage in the solicitation of the public savings, and manages credit and banking loan services;
(ii) the foundation which functions as a non profit entity is provided with significant capital and directs the resources obtained from the management of the bank exclusively for social aims.

The Banking Foundation, which enjoys a first level position in the world of Italian non profit organisations, gives rise to a lively debate among scholars and numerous legislative intervention, and involves numerous problematic issues in the fields of banking, non-profit and of privatization.

In the desire to resolve these issues, there has been a rapid evolution in distinct phases, of the rules and guidelines governing banking foundations which has culminated in the directive of November 18, 1994, issued by the Ministry of the Treasury. Although the directive is not the exclusive source of the law regarding banking foundations, it is the latest directive which governs their structure and their duties.

The directive takes into consideration the principles of the disinvestment of a quota of bank holdings as well as the principle of diversified utilisation of the revenues. These two principles satisfy both the need of the bank to have a diversified portfolio, as well as the need of the Foundation to have more sources able to produce the income that services its institutional activity.

The directive, in light of these principles, defines a series of objectives that banking foundations must attain.

In fact this directive attempts to achieve the conditions for a greater separation between foundations and the controlled banks.

This separation is manifested by provisions that provide for the separation of decision bodies, i.e. the Board of Directors of the foundation and of the bank must be different. Also the shares that both the bank and the foundation controls must be different.

The directive also provides for the economic stability of the foundation. In fact the foundation must use the banks revenue but not the banks capital for the foundation's normal institutional activities and furthermore it cannot finance over 50% of the foundation's activity with these revenues.

In addition, the directive indicates general criteria for revenue uses in accordance with the principle of risk diversification. There are no compulsory provisions binding the foundation, however there are fiscally motivating provisions to encourage the adherence to these provisions.

Specifically, Article 2 of the directive states that the foundations that engage in the transfer of the bank shares must disclose the procedure and time of the share transfer in order to assure the diversification of the capital of the foundation. This share transfer must occur within five years from the promulgation of this directive, and the share transfer must be at least 50% of the banks holdings.

To assure the adherence to these provisions, a fiscal incentive is offered as a tax exemption on the capital gain derived from the transfer of shares, conditioned on the fact that the transfers are effectuated within the period of five years and that the transfers must bring about the reduction of the holdings under 50%.

If the bank shares are transferred within the five year period as provided under Article 2, then the foundation will not only enjoy a fiscal exemption for the five year period but also for any bank share transfer thereafter.

The procedure for the transfer of the bank shares is governed by article 7 which establishes that the transfer must occur through the public offer of sale or alternatively, through direct dealing.

The latter alternative is possible only with the express authorisation of the Ministry of the Treasury on condition that the share transfer occurs among banks or companies belonging to banking groups, financial companies, or insurance companies.

If the share transfer is done with the purpose to create a stable group of shareholders this transfer can be carried out by direct dealing, with the express authorisation of the Ministry of the Treasury and the shareholders participating in this operation must communicate to the Ministry of the Treasury their shareholder Agreement. The transfer resolutions must be presented to the Ministry of the Treasury and simultaneously sent to the Bank of Italy.

Within thirty days from receipt of the transfer resolutions the Ministry of the Treasury in the form of a decree declares the resolution of the share transfer of a sole lot to be conforming.

In the case where the lot of shares is divided for the purpose of more than one transfer, then this plan and each resolution on the execution of transfer, must be sent to the Ministry of Treasury for the certification of conformity.

This article was intended to provide general guidelines. Specialist advice should be sought about specific facts.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.