Italy's new government will review the previous administration's overhaul of mutual and cooperative banks and will look into separating banks' retail and investment activities, Italian Prime Minister Giuseppe Conte told parliament, Reuters said.
The reform, which is forcing hundreds of cooperative banks to transform into joint stock companies, was aimed at making the small lenders more efficient.
However, Alberto Bagnai, a prominent senator in Italy's governing coalition, said the reform must be amended as it would allow foreigners to gain further traction in the local market, Reuters said. He noted that the reform would pave the way for foreign investors to fill an approximately €2.5 billion capital shortfall and eventually reduce bank lending to small firms in Italy, the report said.
A legal document showed that Italy's state council is set to rule over appeals against the reform Oct. 18, according to Reuters.
The council will also set a deadline for the transformation of Banca Popolare di Sondrio SCpA and Banca Popolare di Bari SCpA into joint-stock companies from cooperative banks. The two lenders are the remaining banks that have yet to comply with the reform, Reuters noted.
Meanwhile, plans to separate banks' retail and investment activities are expected to mostly affect Intesa Sanpaolo SpA, UniCredit SpA and other large banks in Italy, Bloomberg News wrote.
