ROME (Reuters) - Italy’s government agreed on Tuesday to delay a reform of small banks, slowing an overhaul planned by the former center-left government and backed by the European Central Bank.
The reform of cooperative (BCC) and mutual banks is aimed at forcing mergers among small lenders in a bid to strengthen Italy’s financial stability.
But the overhaul will take longer than initially planned and will give more powers to small banks within merged entities under the measures adopted by Italy’s anti-establishment executive.
“We reformed the reform,” Italy’s Prime Minister Giuseppe Conte told a news conference. He said banks were given more time to adapt to the new rules.
The delay is the result of a compromise within the government coalition. The far-right League wanted to freeze the reform indefinitely, while other members of the executive, led by Italy’s Finance Minister Giovanni Tria, argued for a two-month delay.
Eventually, cooperative banks (BCCs) will get three additional months to meet a deadline to agree on merging with other banks. The deadline would be doubled to 180 days from the 90 days initially foreseen in the overhaul proposed by the previous government.
The extended period to comply with the new rules will kick off after supervisors authorize the new holdings under which nearly 300 BCCs will merge.
Two Italian mutual banks will also have to turn into joint stocks companies by Dec. 31 to become more solid, a government statement said, in a measure that postpones a deadline that has already expired in May.
A government official had previously indicated the deadline would be extended just to the end of October.
The government also gave back some powers to smaller banks within the larger merged entities in an attempt to protect their local operations and purpose, Tria told reporters.
Writing by Francesco Guarascio; Editing by Matthew Mpoke Bigg and Crispian Balmer