FRANKFURT, Sept 5 Co-operative banks in Italy
should seek approval from their parent company before granting
large loans, the European Central Bank said on Monday.
The comment is part of a legal opinion on a Bank of Italy's
circular implementing the Italian government's reform of
co-operative lenders, aimed at making that part of the Italian
banking system more efficient and safe.
"In particular, the parent bank should be given specific
powers to confirm loan transactions... that exceed a specific
percentage of the affiliated bank's own funds," the ECB said.
"Similarly, the parent bank should be empowered to approve
transactions where the total exposure towards the same client or
a group of connected clients is above predefined thresholds."
Italy's high pile of bad loans has been a key source of
concern for the ECB, which is due to publish shortly new
guidelines on how banks should bring down their soured credit.
To read the opinion if full, please click: here
(Reporting By Francesco Canepa; Editing by Balazs Koranyi)