We have managed to maintain strong capital ratios without having to implement rights issues like the majority of other Italian banks (our last was in 1998).
The European regulations on banking supervision have been strengthened in recent years with the Capital Requirements Directive IV and Capital Requirements Regulation (CRD IV/CRR, otherwise known as Basel III). The new regulations set stricter capital requirements for banking activity in terms of the type and amount of the risks faced.
In 2014 the Capital Requirements Directive IV and Capital Requirements Regulation came into force. CRD IV/CRR, otherwise known as Basel III, was transposed into Italian law under Bank of Italy circular no. 285 released in December 2013.
The new regulations are intended to:
- improve the banking sector’s capability to absorb the shocks deriving from economic and financial tensions;
- improve risk management and governance;
- strengthen banks’ transparency and reporting.
Basel III consists of three pillars:
- Pillar I: minimum capital requirements, risk coverage, leverage ratio. Entails stricter capital requirements in order to meet the risks typically faced in banking activity;
- Pillar II: risk management and supervision;
- Pillar III: market regulations and new public disclosure requirements.
Capital ratios at 30 June 2020:
- Common equity ratio (CET1 phase-in): 16.1%,up 200 bps compared with the figure recorded at 30 June 2019 (14.1%), as it includes 50bps positive impact from the cancellation, in line with the ECB guidance, of the dividend set aside for FY20 (DPS €0.27) and 80bps relating to regulatory provisions (o/w 50bps added as a result of the different concentration limit from 20% to 25% of the eligible capital);
- Total capital ratio (TC phase-in): 18.8%, higher than the figure recorded at 30 June 2019 (17.5%).