BRUSSELS/MILAN (Reuters) - A legal adviser to the European Union’s top court said on Tuesday that the overhaul of mutual banks adopted in Italy in 2015 was in line with EU rules, dismissing an appeal filed by small shareholders and consumer organisations.
The opinion is not binding on the European Court of Justice (ECJ) but judges do normally follow the legal advice given by the court’s advocate general.
They would normally rule in two to four months after such an opinion is given.
The reform was adopted in 2015 by the government of former Prime Minister Matteo Renzi and obliges large Italian mutual lenders to become joint-stock companies, in an effort to improve governance and boost their appeal for potential investors.
The reform scrapped the one-vote-per-investor rule that was a traditional governance feature of Italy’s so-called “popolari” lenders, opening the way for consolidation in the sector and making popolari banks into potential takeover targets.
The changes, however, have been put on hold following an appeal by some small shareholders and consumer organisations.
In 2018 Italy’s Constitutional Court dismissed claims the reform could be unconstitutional, but Italy’s Council of State said it would only rule on the appeal following a decision by the ECJ, freezing the changes.
In the meantime, most of the 10 largest popolari banks targeted by the reform have already complied with the terms of the overhaul.
The reform resulted in the merger of Popolare di Milano and Banco Popolare to create Italy’s third-largest bank Banco BPM (BAMI.MI) in 2017.
Banca Popolare di Sondrio (BPSI.MI) and the troubled Popolare di Bari, currently under special administration, are the only two that are yet to comply.
The European Union court’s advocate general said on Tuesday that although the reform envisages some restrictions, it “appears justified by the goal of ensuring sound governance and stability of the banking sector as a whole in Italy and, in particular, of the mutual banking sector in a member state”.
Shares in Banca Popolare di Sondrio rose as much as 8.3% on Tuesday on the news, which fuelled expectations of a possible takeover.
Reporting by Francesco Guarascio in Brussels, Andrea Mandala in Milan; editing by Philip Blenkinsop and Ed Osmond