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EU Commission clears revaluation of Bank of Italy capital
May 23, 2014 / 7:07 PM / 3 years ago

EU Commission clears revaluation of Bank of Italy capital

BRUSSELS, May 23 (Reuters) - The European Commission on Friday cleared the revaluation of the Bank of Italy’s share capital, which has boosted the value of stakes held in the central bank by domestic lenders, saying it did not see it as a form of state aid.

“The Commission has carefully examined the information submitted by Italian authorities,” a spokesman for European Union Competition Commissioner Joaquin Almunia said in a note.

“Taking into account the fact that the Bank of Italy is a central bank and has a very specific ownership structure, the Commission will not investigate this matter under EU state aid rules.”

Italy earlier this year passed a law allowing the Bank of Italy to use its reserves to boost the value of its share capital to 7.5 billion euros ($10 billion) from 156,000 euros - a level that had not been changed since the 1930s.

Italian lenders are shareholders in the central bank and the revaluation has allowed some of them to book significant capital gains.

The EU Commission asked Italian authorities in February to provide information on the revaluation in order to assess whether it could represent state aid to banks.

The measures have stirred controversy in Italy with anti-establishment party 5-Star Movement branding it as “a gift” from the government to the banks.

But shares in Italian banks suffered last month after the government announced it was more than doubling the tax rate on gains from the revalued Bank of Italy stakes.

Also, banks will not receive a core capital boost from the revalued stakes until at least 2015, contrary to hopes in the sector this could help them face any potential capital shortfall arising from a review of lenders the European Central Bank is carrying out this year. ($1 = 0.7336 Euros) (Reporting by Francesco Guarascio, writing by Valentina Za, editing by David Evans)

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