Obbligazione EmilianoCredito Spa 3.125% ( XS1199020295 ) in EUR

EmilianoCredito Spa

100 EUR ▲

Italia

XS1199020295 ( in EUR )

3.125% per anno ( pagato 1 volta l'anno)

13/03/2025 - Obbligazione è scaduto

Prospetto opuscolo dell'obbligazione Credito Emiliano Spa XS1199020295 in EUR 3.125%, scaduta

100 000 EUR

200 000 000 EUR

Credito Emiliano SpA è una banca italiana operante principalmente in Emilia-Romagna, con attività di credito, investimento e gestione patrimoniale.

The Obbligazione issued by EmilianoCredito Spa ( Italy ) , in EUR, with the ISIN code XS1199020295, pays a coupon of 3.125% per year.
The coupons are paid 1 time per year and the Obbligazione maturity is 13/03/2025

CREDITO EMILIANO S.p.A.
(incorporated with limited liability in the Republic of Italy)
Issue of 200,000,000 Subordinated Callable Fixed Rate Reset Notes due 13 March 2025
The 200,000,000 Subordinated Callable Fixed Rate Reset Notes due 13 March 2025 (the Notes) will be issued by Credito
Emiliano S.p.A. (the Issuer or Credem, and along with its subsidiaries, the Credem Group). The Notes will constitute direct,
unsecured and subordinated obligations of the Issuer, as described in Condition 2 (Status) in "Terms and Conditions of the Notes".
The Notes will bear interest at the applicable Rate of Interest (as defined in Condition 3 (Interest)) from and including 13 March
2015 (the Issue Date), payable annually in arrear on 13 March in each year. The Rate of Interest for each Interest Period (i) from
(and including) the Issue Date to (but excluding) 13 March 2020 (the Reset Date) will be 3.125 per cent. per annum and (ii) from
(and including) the Reset Date to (but excluding) 13 March 2025 (the Maturity Date) will be the Reset Rate of Interest, each as
defined in Condition 3 (Interest). The first payment representing a full year's interest shall be made on 13 March 2016.
Unless previously redeemed or purchased and cancelled as provided in "Terms and Conditions of the Notes", the Notes will
be redeemed at 100 per cent. of their principal amount on 13 March 2025. Noteholders do not have the right to call for the
redemption of the Notes. The Issuer may, at its option (subject to the approval of the Bank of Italy (the Supervisory Authority)),
redeem the Notes in whole, but not in part, on 13 March 2020 (the Call Date) at their principal amount, together with interest
accrued to the date fixed for redemption. The Issuer may also, at its option (but subject to the approval of the Supervisory
Authority), redeem the Notes in whole but not in part at their principal amount, together with interest accrued to the date fixed for
redemption, upon occurrence of a change in the regulatory classification of the Notes that would be likely to result in their exclusion,
in whole, as Tier 2 Capital of the Issuer or the Credem Group, as further described in Condition 5.4 (Redemption for Regulatory
Reasons (Regulatory Call)). The Notes may also be redeemed by the Issuer, at its option, at their principal amount, together with
interest accrued to the date fixed for redemption, for taxation reasons as described in Condition 5.2 (Redemption for Taxation
Reasons).
Application has been made to the Commission de Surveillance du Secteur Financier (the CSSF) in its capacity as competent
authority under the Luxembourg Act dated 10 July 2005, as amended (the Luxembourg Act) on prospectuses for securities to
approve this document (the Prospectus) as a prospectus and to the Luxembourg Stock Exchange for the listing of the Notes on
the Official List of the Luxembourg Stock Exchange and admission to trading on the Luxembourg Stock Exchange's regulated
market. The CSSF assumes no responsibility for the economic and financial soundness of the transactions contemplated by this
Prospectus or the quality or solvency of the Issuer in accordance with Article 7(7) of the Luxembourg Act.
This Prospectus (together with the documents incorporated by reference herein) is available for viewing on the website of the
Luxembourg Stock Exchange. Payments of interest or other amounts relating to the Notes may be subject to a substitute tax
(referred to as imposta sostitutiva) of 26 per cent. in certain circumstances. In order to obtain exemption at source from imposta
sostitutiva in respect of payments of interest or other amounts relating to the Notes each Noteholder not resident in the Republic of
Italy is required to comply with the deposit requirements described in "Taxation Taxation in the Republic of Italy" and to certify,
prior to or concurrently with the delivery of the Notes, that such Noteholder is (i) resident in a country which recognises the Italian
tax authorities' right to an exchange of information pursuant to terms and conditions set forth in the relevant treaty (such countries
are listed in the Ministerial Decree of 4 September 1996, as amended, supplemented and replaced by a ministerial decree to be
enacted according to provisions set forth by Article 168 bis of the Italian Income Tax Code), and (ii) the beneficial owner of
payments of interest, premium or other amounts relating to the Notes, all as more fully set out in "Taxation Taxation in the
Republic of Italy" on page 74.
The Notes are expected to be rated "BBB" by Fitch Ratings Ltd. (Fitch). Fitch is established in the European Union and is
registered under Regulation (EC) No. 1060/2009 (as amended) (the CRA Regulation). As such it is included in the list of credit
rating
agencies
published
by
the
European
Securities
and
Markets
Authority
on
its
website
(at
http://www.esma.europa.eu/page/List-registered-and-certified-CRAs) in accordance with the CRA Regulation. A rating is not a
recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the
assigning rating agency. Please also refer to "Credit ratings may not reflect all risks" in the "Risk Factors" section of this Prospectus.
The Notes will initially be represented by a temporary global note (the Temporary Global Note), without interest coupons,
which will be deposited on or about the Issue Date with a common depositary for Euroclear Bank SA/NV (Euroclear) and
Clearstream Banking, société anonyme (Clearstream, Luxembourg). Interests in the Temporary Global Note will be exchangeable
for interests in a permanent global note (the Permanent Global Note and, together with the Temporary Global Note, the Global
Notes), without interest coupons, on or after 22 April 2015 (the Exchange Date), upon certification as to non-U.S. beneficial
ownership. Interests in the Permanent Global Note will be exchangeable for definitive Notes only in certain limited circumstances -
see "Overview of Provisions relating to the Notes while in Global form".
An investment in the Notes involves certain risks. Prospective purchasers of the Notes should ensure that they
understand the nature of the Notes and the extent of their exposure to risks and that they consider the suitability of the
Notes as an investment in the light of their own circumstances and financial condition. For a discussion of these risks see
"Risk Factors" below.
Sole Lead Manager
Goldman Sachs International
The date of this Prospectus is 12 March 2015

This Prospectus constitutes a prospectus for the purposes of Article 5.3 of the Prospectus Directive
and for the purposes of the Luxembourg Act. Prospectus Directive means Directive 2003/71/EC (as
amended, including by Directive 2010/73/EU) and includes any relevant implementing measure in a
relevant member state of the European Economic Area.
The Issuer accepts responsibility for the information contained in this Prospectus. To the best of the
knowledge of the Issuer, having taken all reasonable care to ensure that such is the case, the information
contained in this Prospectus is in accordance with the facts and does not omit anything likely to affect the
import of such information.
This Prospectus is to be read in conjunction with all documents which are deemed to be incorporated
herein by reference (see "Documents Incorporated by Reference"). This Prospectus shall be read and
construed on the basis that such documents are incorporated and form part of this Prospectus.
The Sole Lead Manager named under "Subscription and Sale" below has not expressly verified the
information contained herein. Accordingly, no representation, warranty or undertaking, express or
implied, is made by the Sole Lead Manager or any of its affiliates and no responsibility or liability is
accepted by the Sole Lead Manager or by any of its affiliates as to the accuracy or completeness of the
information contained or incorporated in this Prospectus or of any other information provided by the
Issuer in connection with the Notes. Neither the Sole Lead Manager, nor any of its affiliates, accepts any
liability in relation to the information contained or incorporated by reference in this Prospectus or any
other information provided by the Issuer in connection with the Notes.
No person is or has been authorised by the Issuer to give any information or to make any
representation not contained in or not consistent with this Prospectus or any other information supplied
by the Issuer or such other information as is in the public domain and, if given or made, such information
or representation must not be relied upon as having been authorised by the Issuer or the Sole Lead
Manager.
No person is or has been authorised to give any information or to make any representation not
contained in or not consistent with this Prospectus or any other document entered into in relation to the
issuance of the Notes or any information supplied by the Issuer or such other information as is in the
public domain and, if given or made, such information or representation must not be relied upon as
having been authorised by the Issuer or the Sole Lead Manager.
Neither this Prospectus nor any other information supplied in connection with the issuance of the
Notes (a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as
a recommendation by the Issuer or the Sole Lead Manager or any of its affiliates that any recipient of this
Prospectus or any other information supplied in connection with the Notes should purchase the Notes.
Each investor contemplating purchasing any Notes should make its own independent investigation of the
financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer and its group.
Neither this Prospectus nor any other information supplied in connection with the Notes constitutes an
offer or invitation by or on behalf of the Issuer or the Sole Lead Manager or any of its affiliates to any
person to subscribe for or to purchase the Notes.
Neither this Prospectus nor any other information supplied in connection with the Notes (a) is
intended to provide the basis of any credit or other evaluation or (b) should be considered as a
recommendation by the Issuer or the Sole Lead Manager that any recipient of this Prospectus or of any
other information supplied in connection with the Notes should purchase any Notes. Each investor
contemplating purchasing any Notes should make its own independent investigation of the financial
conditions and affairs, and its own appraisal of the creditworthiness, of the Issuer and its group. Neither
this Prospectus nor any other information supplied in connection with the issue of the Notes constitutes
an offer or invitation by or on behalf of the Issuer or the Sole Lead Manager to any person to subscribe
for or to purchase any Notes.
The distribution of this Prospectus and the offering, sale and delivery of the Notes in certain
jurisdictions may be restricted by law. Persons into whose possession this Prospectus comes are
required by the Issuer and the Sole Lead Manager to inform themselves about and to observe any such
restrictions (see "Subscription and Sale").
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The Notes have not been and will not be registered under the U.S. Securities Act of 1933 (the
Securities Act) and are subject to U.S. tax law requirements. Subject to certain exceptions, the
Notes may not be offered, sold or delivered within the United States or to U.S. persons (as
defined in the U.S. Internal Revenue Code of 1986, as amended, and regulations thereunder). The
Notes may be offered and sold outside the United States to non-U.S. persons in reliance on
Regulation S (Regulation S) under the Securities Act. For a description of certain restrictions on
offers, sales and deliveries of the Notes and on the distribution of this Prospectus and other
offering material relating to the Notes, see "Subscription and Sale".
This Prospectus does not constitute an offer to sell or the solicitation of an offer to buy the Notes in
any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction.
The distribution of this Prospectus and the offer or sale of Notes may be restricted by law in certain
jurisdictions. The Issuer and the Sole Lead Manager do not represent that this Prospectus may be
lawfully distributed, or that any Notes may be lawfully offered, in compliance with any applicable
registration or other requirements in any such jurisdiction, or pursuant to an exemption available
thereunder, or assume any responsibility for facilitating any such distribution or offering. Accordingly, no
Notes may be offered or sold, directly or indirectly, and neither this Prospectus nor any advertisement or
other offering material may be distributed or published in any jurisdiction, except under circumstances
that will result in compliance with any applicable laws and regulations. Persons into whose possession
this Prospectus or any Notes may come must inform themselves about, and observe, any such
restrictions on the distribution of this Prospectus and the offering and sale of Notes. In particular, there
are restrictions on the distribution of this Prospectus and the offer or sale of Notes in the United States of
America, the United Kingdom and Italy (see "Subscription and Sale").
This Prospectus has been prepared on the basis that any offer of the Notes in any Member State of
the European Economic Area (each, a Relevant Member State) will be made pursuant to an exemption
under the Prospectus Directive, as implemented in that Relevant Member State, from the requirement to
publish a prospectus for offers of the Notes. Accordingly, any person making or intending to make an
offer in that Relevant Member State of the Notes may only do so in circumstances in which no obligation
arises for the Issuer or the Sole Lead Manager to publish a prospectus pursuant to Article 3 of the
Prospectus Directive, in each case, in relation to such offer. Neither the Issuer nor the Sole Lead
Manager has authorised, nor do they authorise, the making of any offer of the Notes in circumstances in
which an obligation arises for the Issuer or the Sole Lead Manager to publish or supplement a
prospectus for such offer.
Each prospective investor in the Notes must determine, based on its own independent review and
such professional advice as it deems appropriate under the circumstances, that its acquisition of the
Notes is fully consistent with its financial needs, objectives and condition, complies and is fully consistent
with all investment policies, guidelines and restrictions applicable to it and is a fit, proper and suitable
investment for it, notwithstanding the clear and substantial risks inherent in investing in or holding the
Notes.
A prospective investor may not rely on the Issuer, the Sole Lead Manager or any of their respective
affiliates in connection with its determination as to the legality of its acquisition of the Notes or as to the
other matters referred to above.
The Notes may not be a suitable investment for all investors. Each potential investor in the Notes
must determine the suitability of that investment in light of its own financial circumstances and investment
objectives, and only after careful consideration with their financial, legal, tax and other advisers. In
particular, each potential investor should:

have sufficient knowledge and experience to make a meaningful evaluation of the Notes, the
merits and risks of investing in the Notes and the information contained or incorporated by
reference in this Prospectus;

have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its
particular financial situation, an investment in the Notes and the impact the Notes will have on its
overall investment portfolio;

have sufficient financial resources and liquidity to bear all of the risks of an investment in the
Notes, including where the currency for principal or interest payments is different from the
potential investor's currency;
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understand thoroughly the terms of the Notes and be familiar with the behaviour of financial
markets; and

be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for
economic, interest rate and other factors that may affect its investment and its ability to bear
applicable risks.
The Notes are complex financial instruments. Sophisticated institutional investors generally do not
purchase complex financial instruments as stand-alone investments. They purchase complex financial
instruments as a way to reduce risk or enhance yield with an understood, measured and appropriate
addition of risk to their overall portfolios. A potential investor should not invest in Notes which are
complex financial instruments unless it has the expertise (either alone or with a financial adviser) to
evaluate how the Notes will perform under changing conditions, the resulting effects on the value of the
Notes and the impact this investment will have on the potential investor's overall investment portfolio.
Each prospective investor should consult its own advisers as to legal, tax and related aspects in
connection with any investment in the Notes. An investor's effective yield on the Notes may be
diminished by certain charges such as taxes, duties, custodian fees on that investor on its investment in
the Notes or the way in which such investment is held.
This Prospectus, including the documents incorporated by reference herein, contains forward-looking
statements. Such items in this Prospectus include, but are not limited to, statements made under "Risk
Factors." Such statements can be generally identified by the use of terms such as "anticipates,"
"believes," "could," "expects," "may," "plans," "should," "will" and "would," or by comparable terms and the
negatives of such terms. By their nature, forward looking statements and projections involve risk and
uncertainty, and the factors described in the context of such forward looking statements and targets in
this Prospectus could cause actual results and developments to differ materially from those expressed in
or implied by such forward looking statements. The Issuer has based forward-looking statements on its
expectations and projections about future events as of the date such statements were made. These
forward-looking statements are subject to risks, uncertainties and assumptions about Credito Emiliano
S.p.A. and the Credem Group, including, among other things, the risks set out under "Risk Factors".
All references in this Prospectus to EUR, or euro are to the currency introduced at the start of the
third stage of European economic and monetary union pursuant to the Treaty on the Functioning of the
European Union of those members of the European Union which are participating in the European
economic and monetary union. In addition, all references in this document to U.S. dollars, U.S.$ and $
refer to United States dollars and references to Sterling and £ refer to pounds sterling.
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STABILISATION
IN CONNECTION WITH THE ISSUE OF THE NOTES, GOLDMAN SACHS INTERNATIONAL IN ITS
CAPACITY AS STABILISATION MANAGER MAY OVER ALLOT NOTES OR EFFECT
TRANSACTIONS WITH A VIEW TO SUPPORTING THE PRICE OF THE NOTES AT A LEVEL
HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO
ASSURANCE THAT THE STABILISATION MANAGER WILL UNDERTAKE ANY SUCH
STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE
ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE NOTES IS
MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE
EARLIER OF 30 DAYS AFTER THE ISSUE DATE AND 60 DAYS AFTER THE DATE OF THE
ALLOTMENT OF THE NOTES. ANY SUCH STABILISATION ACTIVITIES SHALL BE CONDUCTED IN
ACCORDANCE WITH ALL APPLICABLE LAWS, REGULATIONS AND RULES.
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Table of Contents
Page
Risk Factors ............................................................................................................................................ 7
Overview ............................................................................................................................................... 22
Documents Incorporated by Reference ................................................................................................26
Terms and Conditions of the Notes ......................................................................................................29
Overview of Provisions relating to the Notes while in Global Form ......................................................42
Use of Proceeds ...................................................................................................................................44
Description of the Issuer .......................................................................................................................45
Overview of the Financial Information relating to the Credem Group ...................................................69
Taxation ................................................................................................................................................ 73
Subscription and Sale ...........................................................................................................................80
General Information ..............................................................................................................................82
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RISK FACTORS
The Issuer believes that the following factors may affect its ability to fulfil its obligations under the
Notes. All of these factors are contingencies which may or may not occur and the Issuer is not in a
position to express a view on the likelihood of any such contingency occurring.
In addition, factors which are material for the purpose of assessing the market risks associated with
the Notes are also described below.
The Issuer believes that the factors described below represent the material risks inherent in investing
in the Notes, but the inability of the Issuer to pay interest, principal or other amounts on or in
connection with the Notes may occur for other reasons. The Issuer has identified in this Prospectus a
number of factors which could materially adversely affect its businesses and ability to make payments
due under the Notes. Prospective investors should also read the detailed information set out
elsewhere in this Prospectus and reach their own views prior to making any investment decision.
Words and expressions defined in the "Terms and Conditions of the Notes" below or elsewhere in this
Prospectus have the same meanings in this section, unless otherwise stated. References to a
numbered "Condition" shall be to the relevant Condition in the Terms and Conditions of the Notes.
Factors that may affect the issuer's ability to fulfil its obligations under the Notes
Risks relating to the Issuer and the Credem Group
Risks relating to the Issuer's business
As a credit institution, the Issuer is exposed to the typical risks associated with the business of a
financial intermediary such as credit risk, market risk, interest rate risk, liquidity and operational risk,
plus a series of other risks typical to businesses such as strategic risk, legal risk, tax and reputational
exposure.
Credit risk relates to the risk of loss arising from counterparty default (in particular, recoverability of
loans) or in the broadest sense from a failure to perform contractual obligations.
Market risk relates to the risk arising from market transactions in financial instruments, currencies and
commodities.
Interest rate risk refers to the possibility of the Issuer incurring losses as a result of a poor
performance in market interest rates.
Liquidity risk relates to the Issuer's ability or lack thereof to meet cash disbursements in a timely and
economic manner. It is quantified as the additional cost arising from asset sales and/or negotiation of
new liabilities incurred by the intermediary when required to meet unexpected commitments by way of
recourse to the market.
Operational risk relates to the risk of loss arising from shortcomings or failures in internal processes,
people or systems and from external events.
Risks connected with the creditworthiness of customers
The Issuer's business depends to a substantial degree on the creditworthiness of its customers.
Notwithstanding its detailed controls including customer credit checks, it bears normal lending risks
and thus may not, for reasons beyond its control (such as, for example, fraudulent behaviour by
customers), have access to all relevant information regarding any particular customer, their financial
position, or their ability to pay amounts owed or repay amounts borrowed. The failure of customers to
accurately report their financial and credit position or to comply with the terms of their agreements or
other contractual provisions could have an adverse effect on the Issuer's business and financial
results.
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Risks connected with information technology
The Issuer's business relies upon integrated information technology systems, including an offsite
back-up system. It relies on the correct functioning and reliability of such system and on its ability to
protect the Issuer's network infrastructure, information technology equipment and customer
information from losses caused by technical failure, human error, natural disaster, sabotage, power
failures and other losses of function to the system. The loss of information regarding customers or
other information central to the Issuer's business, such as credit risk control, or material interruption in
the service could have a material adverse effect on its results of operations. In addition, upgrades to
the Issuer's information technology required by law or necessitated by future business growth may
require significant investments.
Operational risks
The Credem Group, like all financial institutions, is exposed to many types of operational risk,
including the risk of fraud by employees and outsiders, unauthorised transactions by employees or
operational errors, including errors resulting from faulty information technology or telecommunication
systems, failure to comply with regulatory requirements and Conduct of Business rules, failure of
external systems, for example, those of the Issuer's suppliers or counterparties. The Credem Group's
systems and processes are designed to ensure that the operational risks associated with its activities
are appropriately monitored. Any failure or weakness in these systems, however, could adversely
affect its financial performance and business activities.
Reduced interest rate margin
In recent years, the Italian banking sector has been characterised by increasing competition which,
together with the level of interest rates, has caused a sharp reduction in the difference between
borrowing and lending rates, and has made it difficult for banks to maintain positive growth trends in
interest rate margins. In particular, such competition has had two main effects:
(i)
a progressive reduction in the differential between lending and borrower interest rate, which
may result in the Issuer facing difficulties in maintaining its actual rate of growth in interest
rate margin; and
(ii)
a progressive reduction in commissions and fees, particularly from dealing on behalf of third
parties and orders collection, due to competition on prices.
Both of the above factors may adversely affect the Issuer's financial condition and results of
operations. In addition, downturns in the Italian economy could cause pressure on the competition
through, for example, increased price pressure and lower business volumes for which to compete.
Risks relating to the Credem Group's business sector
Competition
The Issuer is subject to competition from a large number of companies who may offer the same
financial products and services and other forms of alternative and/or novel forms of borrowing or
investment. Such competitors include banks and other financial intermediaries. In addition, the
formation of increasingly large banking groups, and the entry of foreign financial institutions into the
Italian banking market, may allow such companies to offer products and services on terms that are
more financially advantageous than those which the Issuer is able to offer as a result of their possible
economies of scale.
The Issuer's businesses are subject to substantial regulation and regulatory oversight. Any
significant regulatory developments could have an effect on how the Issuer conducts its
businesses and on the results of operations
The Issuer conducts its businesses subject to on-going regulatory and associated risks, including the
effects of changes in laws, regulations, and policies in Italy and at a European level. The timing and
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the form of future changes in regulation are unpredictable and beyond the control of the Issuer, and
changes made could have a material adverse effect on the Issuer's business.
The Issuer is required to hold a licence for its operations and is subject to regulation and supervision
by authorities in Italy. Extensive regulations are already in place and new regulations and guidelines
are introduced relatively frequently. The rules applicable to banks and other entities in banking groups
are mainly provided by implementation of measures consistent with the regulatory framework set out
by the Basel Committee on Banking Supervision (the Basel Committee) and aim at preserving their
stability and solidity and limiting their risk exposure (see below Basel III and the CRD IV Package).
Regulators and supervisory authorities are taking an increasingly strict approach to regulations and
their enforcement that may not be to the Issuer's benefit. A breach of any regulations by the Issuer
could lead to intervention by supervisory authorities and the Issuer could come under investigation
and surveillance, and be involved in judicial or administrative proceedings. The Issuer may also
become subject to new regulations and guidelines that may require additional investments in systems
and people and compliance with which may place additional burdens or restrictions on the Issuer.
The Issuer is also subject to extensive regulation and supervision by the Bank of Italy, CONSOB, the
European Central Bank and the European System of Central Banks. The banking laws to which the
Issuer is subject govern the activities in which banks and foundations may engage and are designed
to maintain the safety and soundness of banks, and limit their exposure to risk. In addition, the Issuer
must comply with financial services laws that govern its marketing and selling practices. The
regulatory framework governing international financial markets is currently being amended in
response to the credit crisis, and new legislation and regulations are being introduced in Italy and the
European Union that will affect the Issuer including proposed regulatory initiatives that could
significantly alter the Issuer's capital requirements.
In particular, in the wake of the global financial crisis that began in 2008, the Basel Committee
approved, in the fourth quarter of 2010, revised global regulatory standards (Basel III) on bank capital
adequacy and liquidity, higher and better-quality capital, better risk coverage, measures to promote
the build-up of capital that can be drawn down in periods of stress and the introduction of a leverage
ratio as a backstop to the risk-based requirement as well as two global liquidity standards. The Basel
III framework adopts a gradual approach, with the requirements to be implemented over time, with full
enforcement in 2019.
In January 2013 the Basel Committee revised its original proposal in respect of the liquidity
requirements in light of concerns raised by the banking industry, providing for a gradual phasing-in of
the Liquidity Coverage Ratio (i.e. annual increases of 10 per cent., starting with 60 per cent. in 2015
and ending with 100 per cent. in 2019), and Basel Committee expanding the definition of high quality
liquid assets to include lower quality corporate securities, equities and residential mortgage backed
securities.
The Basel III framework has been implemented in the EU through new banking regulations adopted
on 26 June 2013 and namely Directive 2013/36/EU of the European Parliament and of the Council of
the European Union of 26 June 2013 on access to the activity of credit institutions and the prudential
supervision of credit institutions and investment firms (the CRD IV Directive) and Regulation (EU) No
575/2013 of the European Parliament and of the Council of the European Union of 26 June 20131 on
prudential requirements for credit institutions and investment firms (the CRD IV Regulation and
together with the CRD IV Directive, CRD IV Package).
Full implementation began on 1 January 2014, with particular elements being phased in over a period
of time (the requirements will be largely fully effective by 2019 and some minor transitional provisions
provide for the phase-in until 2024) but it is possible that in practice implementation under national
laws be delayed until after such date. Additionally, it is possible that, that Member States may
introduce certain provisions at an earlier date than that set out in the CRD IV Package.
The Bank of Italy published new supervisory regulations on banks in December 2013 (Circular of the
Bank of Italy No. 285 of 17 December 2013 (the Circular No. 285)) which came into force on 1
1
Final Corrigendum published on 30 November 2013
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January 2014, implementing the CRD IV Package and setting out additional local prudential rules
concerning matters not harmonised on EU level.
As at 1 January 2014, Italian banks are required to comply with a minimum Common Equity Tier 1
(CET1) Capital ratio of 4.5 per cent.2, Tier I Capital ratio of 5.5 per cent.3 and Total Capital Ratio of 8
per cent.. These minimum ratios are complemented by the following capital buffers to be met with
CET1 Capital:

Capital conservation buffer: set at 2.5 per cent. of risk weighted assets and applies to Credem
from 1 January 2014 (pursuant to Title II, Chapter I, Section II of Circular No. 285);

Counter-cyclical capital buffer: is set by the relevant competent authority between 0 per cent.
- 2.5 per cent. (but may be set higher than 2.5 per cent. where the competent authority
considers that the conditions in the member state justify this), with gradual introduction from 1
January 2016 and applying temporarily in the periods when the relevant national authorities
judge the credit growth excessive (pursuant to Article 130 of the CRD IV Directive);

Capital buffers for globally systemically important banks: set as an "additional loss
absorbency" buffer ranging from 1.0% to 3.5% determined according to specific indicators
(size, interconnectedness, lack of substitutes for the services provided, global activity and
complexity); to be phased in from 1 January 2016 (Article 131 of the CRD IV Directive)
becoming fully effective on 1 January 2019; and

Capital buffers for systemically important banks at a domestic level: up to 2.0% as set by the
relevant competent authority and must be reviewed at least annually from 1 January 2016), to
compensate for the higher risk that such banks represent to the financial system (Article 131
of the CRD IV Directive). The capital buffer for important banks at domestic level belonging to
a group which is a global SIFI is limited. This buffer shall not exceed the higher of 1% of the
total risk exposure amount and the G-SIFI buffer rate applicable to the group at consolidated
level.
In addition to the above listed capital buffers, under Article 133 of the CRD IV Directive each Member
State may introduce a Systemic Risk Buffer of CET 1. Failure to comply with such combined buffer
requirements triggers restrictions on distributions and the need for the bank to adopt a capital
conservation plan on necessary remedial actions (Articles 140 and 141 of the CRD IV Directive ). At
this stage no provision is included on the systemic risk buffer under Article 133 of the CRD IV
Directive as the Italian level1 rules for the CRD IV Directive implementation on this point have not yet
been enacted.
As part of the CRD IV Package transitional arrangements, regulatory capital recognition of
outstanding instruments which qualified as Tier I and Tier II capital instruments under the framework
which the CRD IV Package has replaced EU Directive 2010/76/EU (CRD III) that no longer meet the
minimum criteria under the CRD IV Package will be gradually phased out. Fixing the base at the
nominal amount of such instruments outstanding on 1 January 2013, their recognition is capped at 80
per cent. in 2014, with this cap decreasing by 10 per cent. in each subsequent year.
The new liquidity requirements introduced under the CRD IV Package will also be phased in: the
liquidity indicators (the Liquidity Coverage Ratio), as discussed above, apply from 1 January 2015
and will be gradually phased in and the Commission intends to develop the net stable funding ratio
with the aim of introducing it from 1 January 2018.
The CRD IV Package contains specific mandates for the EBA to develop draft regulatory or
implementing technical standards as well as guidelines and reports related to liquidity in order to
enhance regulatory harmonisation in Europe through the EBA single supervisory rulebook applicable
to EU Member States (the EBA Single Supervisory Rulebook). Specifically, the CRD IV Package
tasks the EBA with advising on appropriate uniform definitions of liquid assets for the Liquidity
2
Final Corrigendum published on 30 November 2013
3
Final Corrigendum published on 30 November 2013
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