January 30, 2019 / 1:29 PM / in 20 days

Italy's smaller 'popolari' banks studying mutual support schemes

MILAN, Jan 30 (Reuters) - Italian unlisted “popolari” banks are considering setting up schemes to support each other in case of necessity and will discuss such plans with the Bank of Italy on Feb. 7, the sector lobby’s chairman told Reuters.

Unlisted smaller “popolari” banks have come under scrutiny as the biggest among them, Popolare di Bari, has been struggling to boost its financial strength. Larger “popolari” banks have been forced to shed their status and become regular joint-stock companies following a 2015 government reform.

Assopopolari Chairman Corrado Sforza Fogliani told Reuters in a telephone interview that such mutual support accords, dubbed Institutional Protection Schemes, existed in Germany, and the Bank of Italy had encouraged their introduction in Italy as well.

He denied smaller “popolari” banks were under any pressure to consolidate and rejected as “totally made up” any merger plans for the sector.

“There isn’t any pressure, not in Assopopolari or within the government ... if anything, the current ruling coalition is in favour of preserving lenders with local roots,” he said.

Sources told Reuters earlier this month that Popolare di Bari had been looking into a possible merger involving other unlisted mutual banks. (Reporting by Andrea Mandala, writing by Valentina Za; editing by Agnieszka Flak)

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