Banca Popolare di Vicenza: From Crisis to Resolution

Banca Popolare di Vicenza's journey from crisis to resolution is a remarkable story. The bank's troubles began in 2015, when it was placed under special administration due to a significant loss of capital.

In 2016, Banca Popolare di Vicenza's losses had grown to €1.4 billion, and it was struggling to meet regulatory requirements. The bank's capital ratio had fallen to a worrying 3.7%.

As the bank's troubles deepened, the Italian government stepped in with a rescue plan. In 2017, a consortium of investors, led by the Italian bank Intesa Sanpaolo, acquired Banca Popolare di Vicenza for €1.17 billion.

Banca Popolare di Vicenza's financial situation was precarious, with the bank's certification of Veneto Banca's financial statements being challenged in court.

The bank's financial troubles led to a liquidation coatta amministrativa, a type of liquidation that is typically used for insolvent companies.

In 2017, the Italian government intervened with a decree law to liquidate the bank, but this decision was later questioned by the Court of Florence, which raised concerns about the constitutionality of the law.

BPVi made several significant acquisitions over the years, starting with Banca Popolare Agricola di Lonigo in 1985.

The bank acquired Banca Popolare di Thiene in 1988, and Banca Popolare dei Sette Comuni-Asiago in 1991.

In 1994, BPVi acquired Banca Popolare di Venezia, and in 1996, the bank acquired Banca Popolare di Castelfranco Veneto, which later became Banca Popolare della Provincia di Treviso in 1999.

Banca Popolare di Trieste was also acquired in 1996, and in 1997, BPVi acquired Banca Popolare della Provincia di Belluno.

The bank continued its expansion by acquiring Banca Popolare "C. Piva" di Valdobbiadene and Banca Popolare Udinese in 1998.

BPVi formed Banca Nuova in Palermo in 2000 and acquired Banca del Popolo of Trapani, which they merged in 2002.

Cassa di Risparmio di Prato (Cariprato) was acquired from Banca Monte dei Paschi di Siena in 2002, with 60 branches mainly in Tuscany region.

In 2007, the bank acquired 61 branches from UBI Banca, mainly based in the Provinces of Brescia and Bergamo, Lombardy.

Sixteen branches were acquired from Cassa di Risparmio di Ferrara in 2014, as well as one branch in Turin from Banca Popolare di Spoleto.

BPVi was a member of the North East Group alliance in the 1980s, which consisted of several banks including Banca Popolare di Sondrio.

The group merged with ARCA in 1989, which consisted of six other banks. As of 2015, BPVi still owned a 19.99% stake in ARCA SGR.

BPVi also signed an agreement with three other banks in 1992 to divide the market in the Province of Padua, Treviso, and Vicenza. However, this agreement was ruled anti-competitive by the Bank of Italy in 1996.

After the ruling, BPVi acquired two of the competitor banks, Banca Popolare di Castelfranco Veneto and Banca Popolare "C. Piva" di Valdobbiadene. This was part of a larger trend of mergers and acquisitions in the banking industry.

BPVi was also part of a partnership with Banca di Roma from 2000 until it broke up. The bank did not participate in the formation of Capitalia, which was later absorbed by UniCredit in 2007.

BPVi had a long-standing alliance with insurer Cattolica Assicurazioni until 2016, during which the bank owned a 15.07% stake in the insurer. However, this partnership ended after the bank's failed capital increase in mid-2016.

The first signs of trouble at the bank came in 2013, when the Bank of Italy conducted inspections that revealed significant losses, but not enough to compromise the bank's minimum capital requirements.

The Bank of Italy requested a complete overhaul of the bank's management and control structures, and the bank was tasked with finding a suitable partner to integrate with.

The bank's advisor identified three Italian banks and three foreign banks as potential partners, but the subsequent survey was unsuccessful.

The Bank of Italy's inspections in 2014 revealed irregularities in the bank's administrative practices, including the purchase of its own shares without prior authorization.

The bank's activity in buying its own shares, known as "financed shares", had significant dimensions, totaling around 900 million euros, and was largely concentrated in the 2013-2014 period.

The irregularities were discovered just before they occurred, and the Bank of Italy's vigilance was instrumental in uncovering them.

The Bank of Italy's investigations into the bank's activities laid the groundwork for the subsequent judicial investigations that are currently underway.

The bank's management was aware of the need for a complete overhaul, but the process was hindered by the lack of suitable partners and the complexity of the integration process.

The bank's advisor was tasked with identifying potential partners, but the process was unsuccessful, and the bank was left to navigate the integration process on its own.

The bank's management was ultimately unable to complete the integration process, and the bank was left to face the consequences of its actions.

The bank's actions were not commissariated because the Bank of Italy's inspections revealed that the bank's losses were not sufficient to compromise its minimum capital requirements.

The bank's irregularities were discovered by the Bank of Italy's inspections, which revealed that the bank had purchased its own shares without prior authorization.

The bank's management was ultimately held accountable for its actions, and the bank was left to face the consequences of its irregularities.

The bank's actions were not commissariated because the Bank of Italy's inspections revealed that the bank's losses were not sufficient to compromise its minimum capital requirements.

The bank's irregularities were discovered by the Bank of Italy's inspections, which revealed that the bank had purchased its own shares without prior authorization.

The bank's management was ultimately held accountable for its actions, and the bank was left to face the consequences of its irregularities.

The bank's management was aware of the need for a complete overhaul, but the process was hindered by the lack of suitable partners and the complexity of the integration process.

The bank's advisor was tasked with identifying potential partners, but the process was unsuccessful, and the bank was left to navigate the integration process on its own.

The bank's management was ultimately unable to complete the integration process, and the bank was left to face the consequences of its actions.

The bank's actions were not commissariated because the Bank of Italy's inspections revealed that the bank's losses were not sufficient to compromise its minimum capital requirements.

The bank's irregularities were discovered by the Bank of Italy's inspections, which revealed that the bank had purchased its own shares without prior authorization.

The bank's management was ultimately held accountable for its actions, and the bank was left to face the consequences of its irregularities.

The crisis of Banca Popolare di Vicenza (BPV) was a complex situation that required a thorough examination of the bank's financial state. The bank was deemed to be in a state of financial distress, prompting the Italian authorities to take action.

The Italian authorities decided to implement a liquidation procedure, which involved the transfer of the bank's assets and liabilities to Intesa Sanpaolo, another Italian bank. This move allowed the bank to preserve its continuity and maintain the value of its operations. The liquidation process also ensured that the bank's creditors, including the state and its clients, were protected.

The liquidation procedure involved the transfer of the bank's assets and liabilities to Intesa Sanpaolo, which included the bank's credit portfolios, real estate, and other assets. The liquidation process also involved the appointment of liquidators to oversee the process and ensure that the bank's creditors were paid off in accordance with the law.

The bank's crisis and resolution process involved a cession in bloco pressoché totalitaria, which allowed for the preservation of the continuity of economic relationships and the value of the banks.

This solution was chosen to avoid a liquidazione "atomistica", where the commissari liquidatori would have sold off individual assets over time, imposing higher costs on creditors and debtors alike.

The cession in bloco allowed for a more efficient and cost-effective resolution of the crisis, minimizing the impact on the finances of the State and clients.

In the alternative scenario of liquidazione "atomistica", the costs would have been higher for all parties involved, including creditors and debtors.

The cession in bloco also allowed for the preservation of the value of the banks, which would have been lost in a liquidazione "atomistica".

This solution was deemed necessary to ensure the orderly resolution of the crisis and to contain the destruction of value associated with it.

The Commissione Europea has established guidelines for the authorization of public interventions in the context of national liquidation procedures, including the requirement that creditors and subordinated creditors participate in the sharing of costs.

In the case of the liquidation of the Veneto banks, the Commissione Europea deemed that the conditions for authorization were met, allowing for the public intervention.

Liquidazioni are the process of winding down the operations of a bank that's no longer viable, transferring its assets and liabilities to another bank, or in this case, Intesa Sanpaolo.

Liquidazioni involve transferring the bank's assets and liabilities to another bank, leaving the remaining assets and liabilities in the two banks in liquidation.

The banks in liquidation will retain their credit deteriorated, or sofferenze, which are likely to default, as well as their past due exposures, and other liabilities.

The banks in liquidation will also retain their actions against former executives, shares, and other instruments of capital, and subordinate liabilities.

The commissari liquidatori, or liquidators, will conduct the liquidation of these assets and pay back the creditors by dividing the recovered amount according to the law's priority order.

The liquidators for VB are avv. Alessandro Leproux, prof.ssa Giuliana Scognamiglio, and dott. Fabrizio Viola, while for BPV they are prof. Giustino Di Cecco, dott. Claudio Ferrario, and dott. Fabrizio Viola.

The liquidators' role is crucial in ensuring a smooth transition and fair distribution of assets and liabilities among creditors.

The European Central Bank (BCE) has fined Popolare Vicenza for inflated accounts. This case highlights the importance of accurate financial reporting.

In cases where banks are investigated and sanctioned for financial reporting issues, they often propose a "consent fee" to adjust certain financial statements and avoid costly lawsuits with creditors. This practice is well-known to institutional investors who have lawyers ready to file lawsuits for even minor contract violations.

Banks may ask retail investors to sign documents hastily, without fully explaining the technical aspects, which can lead to disputes.

The conversion of subordinated bonds into shares of Bpvi is a complex process that requires the approval of the bondholders.

This process, as explained by an Italian lawyer, involves a two-step approach: first, the bondholders must agree to the conversion, taking into account the financial reports of 2014 and 2015, which were affected by increased risk factors.

A change in the prospectus may be necessary to accommodate the conversion, but this is a separate step.

The lawyer's opinion suggests that the merger between Bpvi and Veneto Banca is more about hiding the financial tracks of the two banks rather than creating a new, clean financial entity.

In essence, the conversion of subordinated bonds into shares of Bpvi is a way to obscure the financial dealings of the bank, making it harder for creditors to take legal action.

The lawyer's observation highlights the need for transparency in financial dealings and the importance of protecting the rights of creditors.

This process is likely to be contentious, and its outcome will depend on the agreement of the bondholders and the changes made to the prospectus.

The conversion of subordinated bonds into shares of Bpvi is a critical aspect of the bank's crisis and resolution, and its implications will be far-reaching.

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