On 24 June 2014, Decree 91/2014 (known as the Competitiveness Decree) was published in the Official Gazette. The Decree aims to foster the growth of Italian companies through, amongst other things, facilitating access to new sources of financing. The Decree could also have an impact on the real estate sector.
In particular, the Decree added the following provision to paragraph 2 of article 114 of Legislative Decree no. 385 of 1 September 1993 (the Consolidated Law on Banking or TUB):
“2-bis. Italian insurance companies and SACE [an international insurance group with its headquarters in Rome] shall not carry out any kind of financing activity with the public, other than the granting of guarantees and only to parties that are not physical persons or microenterprises, as defined in art. 2, paragraph 1 of the Annex to Recommendation 2003/361/ EC of the European Commission of 6 May 2003, within the limits set by Legislative Decree no. 209 of 7 September 2005 as amended by this Law, and related implementation provisions issued by IVASS [the supervisory authority for Italian insurers].”
Therefore insurers may now grant loans to companies within the limits laid down by the Decree and in line with the regulations issued by IVASS.
On 21 October 2014 IVASS approved the amendments to Regulation no. 36/2011, dealing with investments to cover technical reserves, which provides that insurance companies may now provide loans to enterprises within certain limits.
First, the amount of each loan must not exceed, as regards the share provided by the insurance company:
- 20 per cent of the amount of net equity shown in the last financial statements of the borrowing company;
- 1 per cent of the technical reserves of the insurance company
Second, four different types of loans are envisaged:
- direct loans to borrowers selected by a bank or a financial intermediary where all the following conditions are met (admissible within the maximum limit of 5 per cent of technical reserves to be covered):
- the bank withholds a percentage of at least 50% of the loan and is entitled to the same rights as those of the insurance company (as regards interest and repayment of the principal);
- the borrowers have a high degree of creditworthiness;
- the financial statements of the borrower are audited;
- direct loans to borrowers selected by a bank or a financial intermediary but where the conditions (ii) and (iii) above are not met (admissible within the maximum limit of 2.5 per cent of technical reserves to be covered);
- direct loans to borrowers selected by a bank or a financial intermediary where the conditions under (i), (ii) and (iii) are not met (allowed within the maximum limit of 1 per cent of technical reserves to be covered);
- direct loans to borrowers not selected by a bank or a financial intermediary (allowed under a specific authorization by IVASS).
IVASS can, in fact, authorize the autonomous carrying out of the activity entailing the identification of potential borrowers of direct loans following the evaluation of the plan relating to the investment of technical reserves approved by the insurer, taking account (among other things) of:
- the existence of a solvency capital requirement in excess of the minimum capital requirement; and
- measurements of capital absorption for direct loans that are the subject of evaluation to be made with a view to the future supervisory regime defined by Directive 2009/138/EU (Solvency II).