S*** just got real for banksters in Italy. Bank of Italy Governor Ignazio Visco has put member Italian banks on notice regarding bonus pools Saturday, requiring member banks who have inadequate capitalization to stop issuing dividends and bonus pools to execs, and is even requiring CLAWBACKS for banks not meeting requirements!
From CapriNews, with Google translate
Bank of Italy, CONTAINMENT AND CAUTION ON BONUS DIVIDEND
03/03/2012Contenimento on the provision of bonuses and prudence in the distribution of dividends and 'recall that the Bank of Italy addressed to banks and banking groups, with a letter released today and signed by Governor Ignazio Visco. "In the current economic climate to combine the objectives of maintaining and supporting the economy and strengthen its capital 'needed - can be explained via Nazionale - the use of all levers available; of these are of particular importance to the decisions taken by banks and banking groups in the distribution of profits and payment of variable compensation under the Budget for 2011 ". The Governor of the Bank of Italy is a "call" to all banks in general on the need 'to adopt policies for distribution of profits' enabling conditions to maintain capital adequacy, present and future, consistent with the overall risk assumed. L 'any distribution of profits should therefore be compatible with maintaining a level of capitalization to assure coverage of regulatory capital requirements and capital levels calculated within the self-assessment of capital adequacy. " The same factors the basis of information provided on dividend policies lead to bring about "a reminder" to banks and banking groups also on the provision of bonuses and the development of new remuneration plans. In particular, the existing provisions provide that the total amount of variable compensation should be sustainable over the bank's financial condition and should not limit its ability 'to maintain or achieve an adequate level of capitalization. "To strengthen capital requirements should lead to a contraction of the bonus pool and / or application systems malus or claw-back. It is therefore considered that the correct application of these provisions is to lead - in the current economic climate and, in particular , in banks and banking groups that have needs improving or maintaining the level of capital - a total cost reduction of variable compensation, for the benefit of the capital profile of the intermediary. " Compliance with these guidelines will be 'evaluated under the most' extensive process of evaluation and supervisory review conducted by the Bank of Italy, in relation to the actual needs of strengthening sheet of each bank or banking group in the second the same criteria for the distribution of profits "
Exactly why we might ask is the Governor of the Bank of Italy suddenly becoming spiritual with regards to capitalization levels among member Italian banks? Could the capitalization issues at Italian banks have anything to do with the ISDA's recent announcement that a 70% Greek haircut is not a default, making the Greek debt credit default swaps held by Italian banks suddenly marked to market (zero) rather than fantasy!?!