Italian ruling party signs bill to split retail and investment banks

Italian ruling party signs bill to split retail and investment banks

Italian ruling party Fratelli d’Italia (FdI) presented a bill in the Italian parliament to separate retail and investment banks, a move that harks at pre-1990s banking structure. At the moment it is not clear if prime minister Giorgia Meloni and her government would support the bill, although Meloni presented a similar bill in 2018 when she was MP.

The draft bill was introduced in lower house of parliament on March 17, signed by FdI’s head at the Chamber Tommaso Foti, with 14 signatures by fellow MPs, including former minister of economy Giulio Tremonti.

Reuters had access to the draft bill and reported that it gives banks 12 months to reorganize operations and choose whether to be an investment bank or a retail one. The bill states that retail banks should not engage in trading as it “undermines the most elementary principles of safeguard for the social and ethical foundation of the economy.”

The bill in 2018 did not pass the parliamentary committee and never made it to the floor of the house. Foti told Reuters that the issue is still worthy of a motion and that is the reason why they presented the bill again. Meloni was not informed, as it is a parliamentary initiative and not a governmental one. The government so far is yet to comment on the issue.

After the collapse of US lender Silicon Valley Bank and the emergency takeover of Credit Suisse, there is a growing fear of spillovers and a call for preventive measures to prevent them. The Italian proposal will bring back the banking sector to the previous statute made in the 1930s, shunning the 1990s deregulation reforms. In Italy pundits and politicians both on the left and on the right have been critical of those reforms and called for new measures for the country’s weak banking sector.


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