By Vish Gain for AMLi
ITALY IS SET to enact a new law that will establish stricter rules for appointing directors of banks and financial institutions, two government sources told Reuters Thursday.
The decree, signed by Italian Minister for Economy Roberto Gualtieri, is to introduce ‘stringent “fit and proper” criteria for banks’ professionalism, integrity and independence per European directives from 2013.
This gives the government power to prevent any individual sentenced for money laundering, involvement with the mafia, or terrorism, from being appointed as the director of a bank. In existing legislation, only sentences for “banking and financial crimes” are mentioned.
The measures rule out former members of government or parliament who seek the position of independent board member within two years of leaving their position.
Had the legislation come earlier, it would have prevented former Minister for Economy Pier Carlo Padoan from being appointed as an independent director of UniCredit, one of Europe’s largest banks and the largest in Italy by total assets.
He is due to take over as chairman next year.
Last week, the bank’s CEO Jean Pierre Mustier announced he would not seek to stay on after his term ends in April 2021, following disagreements between himself and incoming chairman Padoan on the bank’s future investment strategy.
Italy is 7 years late in enacting the directives from the European Central Bank (ECB), which oversees appointments in banks under its supervision.
Italian academic Alessandro Zattoni told Reuters: “Italy’s often late when it comes to adopting new European legislation, so this is welcome news.”
Zattoni, who chairs the International Corporate Governance Society, said the requirements set out in the decree were necessary but insufficient to guarantee well-functioning boards.
“That … hinges on people who have the right personality and ambition to fulfil the company’s objectives, even when this means challenging the course of action proposed by controlling shareholders or powerful managers,” he said.
The legislation, which was further delayed when Italy’s top administrative court called on the Treasury to make some changes before approval, is expected to take effect by the end of this year.
Share this on:
Follow us on:
We hope you enjoyed reading this article
If you would like unlimited access to AML Intelligence premium articles, newsletter delivered twice a week, access to our Global Bank Fines and Penalties database, free access to Boardroom Series events and much more, select one of our subscription options and become a subscriber!
