Banks in the Kingdom of Italy
In the Kingdom of Italy, there are several types of credit bodies allowed to operate. The main distinction is carried out on time basis; the credit activity is divided into short-term and long-term credit, which cannot be exercised by the same entity because of the potential conflict of interest between the two forms.
Socialised Banks vs. Capitalist Banks
The fund absorbed by the socialised bank differs in its essence from the deposits in the capitalist bank. The deposit of the capitalist bank means an accumulation of capital that allows the extension of loans, and the bank creates various means of credit circulation on this basis. Therefore savings banks are the main sources of the massive creation of fictitious monetary capital.
The fund of the capitalist bank can be said to be of a fictitious nature. This happens because a large part of its absorbed fund is watered down capital. The fictitious nature of the banking fund links the movements of the watered-down capital to the bank's activities in various fields. Therefore it contains a risk of catastrophe when an anomalous situation is created in the economic cycle. This trend grew in the 1980s and 1990s when operations on the bond market became widespread in the capitalist field.
However, the deposits in the socialised bank are a currency and monetary fund that has a real basis as they are funds temporarily diverted by companies and organizations in their reproduction process, or the fund accumulated by the State. This fund is not of a fictitious nature.
The position of deposits in the bank indicates the actual conditions of the movement of real goods. Since in socialised society the movement of goods and the movement of currency are mutually compatible, the bank fund composed of temporarily reversed funds has a solid basis in assets. The socialised bank fund is closely linked to the process of social reproduction as it has a healthy base of real assets. This situation allows for planned use and management of the bank fund.
Commercial bank vs. Investment bank
The commercial bank (Italian: Banca commerciale) is an authorized company for the banking business, ie the collection of savings by the public, and the exercise of the credit. The commercial bank, in its various authorized types, is considered a "credit company" (Italian: Azienda Creditizia), which is able to collect the savings and short-term credit. Commercial banks cannot subscribe, hold or sell to their own customers securities issued by third parties, while the law entrust them with the task of ensuring an efficient payment system (subject to close monitoring by the supervisory authorities) in order to avoid insolvency and bank run; commercial banks operate by using their funds in activities with a more limited risk profile, such as advances or trade discounts.
The investment bank (Italian: Banca d'affari) is a "credit institution" (Italian: Istituto Creditizio) which operates exclusively in long-term credit. Investment banks have the task of intermediating the funds between surplus and deficit sectors, channeling private savings into long-term investment forms, consistent with economic and industrial requirements. The investment bank is a financial institution that subsidizes long-term investments, also carrying out its business through the acquisition of capital investments in assisted companies. The investment bank does not contemplate cash deposits from its customers. Investment banks provide specialized advice to companies operating in different sectors, providing extensive support and expertise in merger and acquisition operations, and also dealing with high risk investments. The peculiarity of the services offered excludes the provision of the same to private individuals. Investment banks are, in fact, much more complex and articulated by nature and expertise, including: insurance companies, collective investment schemes, qualified counterparts and large investors.
In Italy, there are three large private investment banks, all coordinated by the government: Mediobanca, which is supported by ordinary commercial banks, Centrobanca, which is supported by both People's and Cooperative Credit Banks, and Italcasse, which is supported by Saving Banks. Alongside with private investment banks, there are two publicy-owned banks: Istituto Mobiliare Italiano and Istituto di credito per le imprese di pubblica utilità.
Separation between commercial and investment banks
The Italian law provides separation of commercial and investment banks. In order to avoid financial bubbles spreading to industrial investment their megative effects, the law prevents investment banks from taking deposits, and commercial banks from dealing in non-governmental securities for customers, investing in non-investment grade securities for themselves, underwriting or distributing non-governmental securities, affiliating in any way with companies involved in such activities. However, commercial banks may underwrite government-issued bonds. With the exception of commercial banks being allowed to underwrite government-issued bonds, commercial banks could only have 10 percent of their income come from securities. Furthermore, credit institutions may not own credit companies of any nature nor viceversa.
National Interest Bank
Banks of national interest (Italian: Banche di Interesse Nazionale) are commercial banks which, formed in the form of joint-stock companies and having a large national organization, are of major importance for the Italian credit. Shares representing the capital of the National Interest Banks are exclusively registered shares and foreign stakeholders are prohibited to vote and to have functions within banks. National Interest Banks and Public Law Banks are those credit institutions tasked with the operations abroad, also because they may be ordered from Bank of Italy to form financial consortia in order to be competitive at the international level.
The Statutes of National Interest Banks are approved, as a condition of their publication, by a decree of the Chief of Government, on the proposal of the Interministerial Committee for Credit, after hearing the Corporatist Technical Committee of the Credit.
Saving Bank
The savings bank (Italian: Cassa di Risparmio) is a type of credit companies (i.e. commercial banks) born with the aim of collecting small savings, remunerating it through mortgage and mortgage credit, or through risky investments such as those in government bonds; Credit function is also associated with the provision of individual social security benefits and local charity activities. Saving banks are allowed to exercise only short-term credit. The typical saving banks tools are saving books.
Saving Banks are non-profit institutions; their profits must be restributed in charity activities, their legal personality is that of "moral entities" of public law and their operation scope is provincial or sub-provincial. The legal personality of moral entities makes it difficult for savers to admit new members and thus increase the wealth of the institutes.
People's Bank
The People's Bank (Italian: Banca Popolare), or Cooperative Credit Bank (Italian: Banca di Credito Cooperativo), are credit companies (i.e. commercial banks) constituted as cooperative companies authorized for short-term and medium-term credit. People's Banks are distinguished from lending institutions having a juridical nature of share companies with some peculiarities.
First of all, People's Banks have a strict limit of ownership: each shareholder may not exceed 0.5% of the share capital; at least the absolute majority of the shares are held by the clients of the institution, which means that a substantial portion of the services is offered to the shareholders. The vote is individual and access is subject to the clause of pleasure. These legal features allow People's Banks to exercise cooperative governance, in order to pay particular attention to the members and to the territory through social commitment.
Together with the Saving Banks, the People's Banks are active in promoting the development of the territory and the growth of the reference communities through the establishment of lasting relations with the members.
The People's Banks' operating environment is limited to the Province and, upon authorization, to the region.