The transformation of the
Italian banking system
The current structure of the Italian
banking system is the result of a
transformation process started in the
beginning of the nineties.
FABI International & Project Dept. October 2006
Communicate Project
1
The transformation of the Italian
banking system
Some legislative hints
Privatizations
How the panorama of the credit sector
has changed
The trade unions’ role in the changes of
the Italian banking system
The income support fund
FABI International & Project Dept. October 2006
Communicate Project
2
The transformation of the Italian
banking system
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Second phase: the protocol of June 16th,
2004, and the renewals of the NA
The National Agreement dated February
12th, 2005
The scenario on the verge of the renewal
of the NA in 2006
FABI International & Project Dept. October 2006
Communicate Project
3
Some legislative hints

With coming into force of the
single text on bank and credit
laws (Decree 353/93), the
regulative outline reaches
some kind of organization:
after a long phase of regulation
making the Italian banking
system needed some ordering,
it was particularly important to
make clearly emerge the
principals and aims the
lawmakers had set themselves
during all these years.

It is a text, amended with its
acknowledgement by the
EUROSIM Directive on
investment services in 1996,
that is composed of a
coordinated series of
regulations aimed at giving the
sector a new structure and a
new discipline, in accordance
with the evolution of the
operational reality and the
provisions of the European
Directives
FABI International & Project Dept. October 2006
Communicate Project
4
Some legislative hints
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The bank can chose the
institutional
model
they
consider more appropriate for
the development of their
activity. The choice between
banking group, full-service
bank or any other combination
is therefore an institutional
choice by the economic
subject;
The activity of supervision
carried out by the authorities is
inspired by the principal of
prudential surveillance;
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Any form of institutional,
temporary and operational
specialization drops in view of
the potential universality of the
financial brokers;
The juridical forms of exertion
of the bank activity have been
standardized to the joint-stock
company, exception made only
of the co-operative banks.
FABI International & Project Dept. October 2006
Communicate Project
5
Privatizations
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A first series of transformations is referable to the
privatizations. The foundations of this process had
been laid by the Amato Law (Law 218/1990).
Subsequently, the law 359/92 provided for the
transformation of the state-owned credit institutes into
the juridical form of a joint-stock company.
To understand the importance of privatizations in the
credit sector just consider that in 1992 the share
owned by the State and the Institutions almost
reached 75%.
FABI International & Project Dept. October 2006
Communicate Project
6
Privatizations
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The actual start of the privatization process was the divestment
of the shares that the Treasury held of Credito Italiano (80.5%) in
1993 and of Banca Commerciale Italiana (51.9%) in 1994.

In 1995, the public share in Italian banks had fallen to 62% of the
total amount, still high in comparison with the other European
countries, e.g. France (36%) and Germany (52%).
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During the ensuing years, a further wave of privatization reduced
the share quickly to 10% in 1999
FABI International & Project Dept. October 2006
Communicate Project
7
How the panorama of the credit
sector has changed
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Between 1993 and 2002, in Italy there have been realized a good
500 mergers that have involved nearly half the banking sector.
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The result of this process has been a significant reduction of the
number of banks operating in Italy.
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The system has reorganized above all in the form of the banking
groups.
FABI International & Project Dept. October 2006
Communicate Project
8
How the panorama of the credit
sector has changed
UNICREDITO ITALIANO
 BANCA INTESA
 SANPAOLO IMI
 CAPITALIA
 BNL
 Monte Paschi Siena MPS

FABI International & Project Dept. October 2006
Communicate Project
9
How the panorama of the credit
sector has changed
The situation today 09/2006
UNICREDIT GROUP
July 2005 take over of HVB (D) and
BA-CA (A) 148.000 employees in 24
countries, in Italy 38.000 employees
6th Banking Group in Europe
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FABI International & Project Dept. October 2006
Communicate Project
10
The trade unions’ role in the changes
of the Italian banking system

in the mid nineties, the Italian banking
system underwent a moment of crisis due
to profitability problems of some South
Italian banks (Banco di Napoli, Sicilcassa,
Banco di Sicilia), but also because of
many undersized banks.
FABI International & Project Dept. October 2006
Communicate Project
11
The trade unions’ role in the changes
of the Italian banking system

The Government, worried about the possible
insolvency of some major banks, and in view of the
integration of the European markets, intervened with
the Italian Bank Association and the trade unions,
promoting the stipulation of a trilateral agreement in
1997. As agreed upon, ABI and the trade unions
signed an applicatory protocol on December 22nd,
1998
FABI International & Project Dept. October 2006
Communicate Project
12
The trade unions’ role in the changes
of the Italian banking system

At the same time, a joint solidarity fund
to finance reorganization and early
retirement, that were expected to affect
10% of the workers, i.e. approximately
30,000 people, was constituted
FABI International & Project Dept. October 2006
Communicate Project
13
The trade unions’ role in the changes
of the Italian banking system

On July 11th, 1999, the new national agreement was
signed, including the union procedures for the
settlement of the occupational spin-offs deriving
from mergers or reorganization, involving for the first
time the group leader bank, that committed
themselves to negotiate with the trade unions and to
make themselves responsible of or – if possible –
reinstate the redundant workers in another company
of the group.
FABI International & Project Dept. October 2006
Communicate Project
14
The trade unions’ role in the changes
of the Italian banking system

In addition, supplementary measures
have been taken, including the
reduction of the weight of the variable
wages and the minimum rises for the
fixed ones, to reduce the labour cost, in
exchange for the preservation of the
employment level.
FABI International & Project Dept. October 2006
Communicate Project
15
The trade unions’ role in the changes
of the Italian banking system

To reduce the expenses and permit the banks
to finance the solidarity fund, that must
manage without any subsidy by the state or
the other public bodies, the workers also
renounced for the rises of the entire biennium
1997-1998.
FABI International & Project Dept. October 2006
Communicate Project
16
The trade unions’ role in the changes
of the Italian banking system

The scope of these drastic measures
was to reduce the ratio between the
labour cost and the margin of
intermediation of the system from 43%
to 39% during the four years life of the
agreement.
FABI International & Project Dept. October 2006
Communicate Project
17
The trade unions’ role in the changes
of the Italian banking system
 At
present (2004) the labour
cost/intermediation margin ratio has
fallen from 43% in 1997 to
approximately 35%, thus the initial
aim of containing the expenses has
been attained.
FABI International & Project Dept. October 2006
Communicate Project
18
The trade unions’ role in the changes
of the Italian banking system

Now we are entering the second phase
that has started with the new protocol in
2004 and has set a new objective, i.e.
to make the Italian banks competitive in
the European banking system, reducing
the above ratio to the European
average of 32-33%.
FABI International & Project Dept. October 2006
Communicate Project
19
The income support fund

In April 2000, the Government issued the
institutional decree of the solidarity fund,
called also income support fund, providing in
its ordinary part the financing of the training
courses and the one-year re-conversion for
redundant workers for the reinstatement in
other sectors or companies with the national
agreement of the credit sector
FABI International & Project Dept. October 2006
Communicate Project
20
The income support fund
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And in its extraordinary part an early
retirement plan up to five years before the
maturity of the pension requirements. The
ordinary
part
provides
a
paritetical
contribution between the companies and the
workers of the system, whereas the costs of
early retirement are entirely charged to the
company that resorts to it.
FABI International & Project Dept. October 2006
Communicate Project
21
The income support fund

The early retired worker receives an
allowance equal to 70% of the last
salary, 100% of it is paid, however, into
compulsory social security in order to
guarantee the worker a pension without
great detriments.
FABI International & Project Dept. October 2006
Communicate Project
22
The income support fund
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During the period from 2000 to 2005, some
20,600 out of 339,000 workers of the system
have profited by the fund.
In addition to the fund, the companies have
adopted other systems of early retirement:
the most important have been those
stipulated in 1997-1998 in Banco di Napoli,
Banco di Sicilia/Sicilcassa and BNL, before
the fund came into force.
FABI International & Project Dept. October 2006
Communicate Project
23
The income support fund

The fund is only accessible through
negotiation and thus a union agreement of
the parties: company/trade union.

The funds life was expected to be 10 years to
start from July 2000 and will therefore expiry
on June 30th, 2010.
FABI International & Project Dept. October 2006
Communicate Project
24
The income support fund
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The further industrial reorganization together
with the reform of the Italian pension system
(that has raised the pension age from 37 to
40 years of contribution) have led to the
Agreement of May 25th, 2005, that has
ratified the extension of the life of the
solidarity fund of the sector until June 30th,
2020.
FABI International & Project Dept. October 2006
Communicate Project
25
Second phase: the protocol of June 16th,
2004, and the renewals of the NA

The economy made by the 1999 NA (the
biennium 1997-98 without rises, the flexibility
of the working hours in order to avoid
overtime work, the limitation of the
reimbursements of travel expenses, the
containment of seniority pay) have permitted
a great reduction of the fixed operating
expenses
FABI International & Project Dept. October 2006
Communicate Project
26
Second phase: the protocol of June 16th,
2004, and the renewals of the NA

That has been used in part to increase the
variable wages through two channels: the
Corporate Production Bonus negotiated in
the company or in the groups with the trade
unions, and the Merit Rating System
(Sistema Incentivante Individuale), applied
with great discretion by the companies,
without any negotiation with the trade union.
FABI International & Project Dept. October 2006
Communicate Project
27
Second phase: the protocol of June 16th,
2004, and the renewals of the NA


The spreading of these merit rating systems has in
fact been carried to excess in some cases.
The lack of clear sales targets and the dialogue with
the trade unions and not least training, that some
companies, even of substantial importance, have
neglected in their haste to reach the levels of
competitiveness in the market, have caused a
negligence of the consultation of the customer on
the placing of the new products, violating legal
provisions in some cases.
FABI International & Project Dept. October 2006
Communicate Project
28
Second phase: the protocol of June 16th,
2004, and the renewals of the NA

The Argentine bond scandal, the Parmalat and Cirio
financial cracks, whose obligations had been
widespread among the savers without informing
them of the risk they were incurring, and sales
strategies and commissions emerged during the last
scandal involving the former management of Banca
Popolare Italiana, have made the ethical problem of
the banks even more urgent.
FABI International & Project Dept. October 2006
Communicate Project
29
Second phase: the protocol of June 16th,
2004, and the renewals of the NA
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The recent “Savings Law” has largely
allowed the system to overcome the absence
of control.
All these reasons have made it necessary to
replace the old 1998 protocol by a new
Protocol on Corporate Social Responsibility
(CSR). The new protocol has been stipulated
by the Italian Bank Association and the trade
unions on June 16th, 2004
FABI International & Project Dept. October 2006
Communicate Project
30
Second phase: the protocol of June 16th,
2004, and the renewals of the NA
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confirms the central role of human resources
in
the
strategies
of
the
system’s
development;

approves the contribution to the system’s
stabilization made by the social parties,
confirming however the trend towards
expense control;
FABI International & Project Dept. October 2006
Communicate Project
31
Second phase: the protocol of June 16th,
2004, and the renewals of the NA


reaffirms the will to direct the banks’
evolution, in a context that remains
competitive, towards a socially sustainable
and compatible development;
commits to improve constantly the quality of
the relations between the companies and the
workers through a new phase of union
relations and the increase of quality of the
services destined for the customers;
FABI International & Project Dept. October 2006
Communicate Project
32
Second phase: the protocol of June 16th,
2004, and the renewals of the NA

confirms the will to intensify training, above
all of the personnel working in the internet,
who must be given information and clear
rules regarding the activity of selling products
to the customers;
FABI International & Project Dept. October 2006
Communicate Project
33
Second phase: the protocol of June 16th,
2004, and the renewals of the NA

extends the liabilities of information in favour
of the trade unions: on the merit rating
systems for the employees that should
include targets regarding as much the quality
as the quantities, providing also a phase of
debate in case of disagreement;
FABI International & Project Dept. October 2006
Communicate Project
34
Second phase: the protocol of June 16th,
2004, and the renewals of the NA

provides the constitution of a national paritetical
surveillance body that is to analyze the system on
the basis of the aforementioned, with a particular
eye to what has been written down in the Green
Paper of the European Commission in July 2001,
and to the results of the project on social
responsibility under examination by the European
Bank Federation - Uni Europa Finance – European
Co-operative Bank Federation – European Savings
Bank Federation.
FABI International & Project Dept. October 2006
Communicate Project
35
The National Agreement dated
February 12th, 2005

The National Agreement, that has been
renewed on February 12th, 2005, has been
amended by a couple of changes vis-à-vis
the modality of agreement and information as
regards the impacts of mergers and
reorganizations on the workers, that provide
vaster terms, considering the experience of
the first two years.
FABI International & Project Dept. October 2006
Communicate Project
36
The National Agreement dated
February 12th, 2005
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It provides the liability of the banks to inform
the trade unions in case of elaboration or
changes of the industrial plans or the
operating policies, even if these do not have
immediate consequences for the workers.
FABI International & Project Dept. October 2006
Communicate Project
37
The National Agreement dated
February 12th, 2005
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A chapter called Social Health and Safety Policies
that groups all the social security and safety rules for
the workers of the sector has been added.
The chapter relating to the merit rating systems has
stipulated the rules concerning the quality indicators
and the new union relations, on this topic, based on
the constructive exchange of views of the parties
instead of mere information. .
FABI International & Project Dept. October 2006
Communicate Project
38
The scenario on the verge of the
renewal of the NA in 2006

We are expecting to enter a new phase of
union relations, with international character,
and a reassessment and multiplication of the
EWC and the representations of the banking
groups compared with those of the single
companies.
FABI International & Project Dept. October 2006
Communicate Project
39
The scenario on the verge of the
renewal of the NA in 2006

In view of the internationalization of the
productive processes, it will be necessary to
reorganize training and the professional
careers of the workers and to reassess the
occupational guarantees
FABI International & Project Dept. October 2006
Communicate Project
40
The scenario on the verge of the
renewal of the NA in 2006
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In 2005, Italy has seen an inedited interest
by the European banking groups (the
takeover bid by Banco Bilbao for BNL, AbnAmro/AntonVeneta and BNP Paribas/BNL) in
the assets of the Italian banks.
FABI International & Project Dept. October 2006
Communicate Project
41
The scenario on the verge of the
renewal of the NA in 2006

Regaining competitiveness is surely positive
for the system, otherwise we would not have
renewed positively neither the NA of July
11th, 1999, nor that of February 12th, 2005.
FABI International & Project Dept. October 2006
Communicate Project
42
The scenario on the verge of the
renewal of the NA in 2006

What people are likely to conceal behind the
pretext of market power, is that results of this
importance have been consciously pursued
and realized by the sector agreements of coordination stipulated by the trade unions on
the one hand and the Italian Bank
Association and Federcasse on the other
hand, in the second half of the nineties
FABI International & Project Dept. October 2006
Communicate Project
43
The scenario on the verge of the
renewal of the NA in 2006

Today’s banking system is still
insufficient with respect to social
questions!
FABI International & Project Dept. October 2006
Communicate Project
44
The scenario on the verge of the
renewal of the NA in 2006

The strategic repositioning of the banking
system has promoted, unilaterally, the
shareholders of the credit institutes
marginalizing the interests of the other parties
involved, from the workers to the customers
and the local economies.
FABI International & Project Dept. October 2006
Communicate Project
45
The scenario on the verge of the
renewal of the NA in 2006

For the same reasons, we reckon that the
process has not yet finished and that the
banking system must pursue a perspective of
a socially and environmentally sustainable
and compatible development that calls
inevitably for the governance of the
companies, or more precisely the presence of
the workers in the managing and supervisory
boards.
FABI International & Project Dept. October 2006
Communicate Project
46
The scenario on the verge of the
renewal of the NA in 2006

The criteria of distribution of the proceeds with the
correction of the unbalanced distribution to the
advantage of the shareholders and the beneficiaries
of stock options, the temporary horizons, with the
medium-long term projection of the economic
balance, should free the banks from the distorted
obsessions of the short term both from the point of
view of the quality of the human resources and that
of the relations with the customers.
FABI International & Project Dept. October 2006
Communicate Project
47
The scenario on the verge of the
renewal of the NA in 2006

It is these principles and objectives that will
allow us to measure if the trade unions and
the Italian Bank Association have or have not
started
the
course
towards
social
responsibility they committed to.
FABI International & Project Dept. October 2006
Communicate Project
48