What future for the Banking Foundations in Italy?

by Giuseppe Antonio Policaro

Abstract: This study examines the historical evolution and contemporary significance of banking foundations in Italy, tracing their transition from public credit institutions to private, nonprofit entities dedicated to economic and social development. Through an analysis of key legislative reforms—including the Amato-Carli Law, the Ciampi Law, and the Tremonti Reform—the study highlights the regulatory changes that have shaped the governance and operational scope of these institutions. Particular emphasis is placed on the challenges posed by political influence, governance inefficiencies, and regulatory ambiguities. The paper also explores the role of banking foundations within the third sector and the implications of their financial management, proposing potential reforms to enhance their efficiency and accountability.

Summary: 1. Introduction. – 2. A brief excursus on foundations: the first transformation of public banks into joint stock companies. 3. – Legislation on foundations of banking origin. – 3.1. The Amato-Carli law and the creation of banking foundations. – 3.2. The Dini directive and the incentives for divestment of holdings of foundations of banking origin. – 3.3 The Ciampi law: the autonomy of foundations and the privatization of banks. – 3.4 The Tremonti reform and the “republicanization” of foundations of banking origin. – 3.5. The conflict of competencies and the reform of Article V of the Italian Constitution. – 3.5.1. Rulings Constitutional Court No. 300 and No. 301 of 2003. – 3.6. The Foundations Charter: the rules of self-discipline. – 3.7.  Further legislative and regulatory interventions: the 2015 Stability Law and the ACRI-MEF Protocol. – 4. The new role of foundations as actors in the third sector. – 5. The legal structure of foundations and the MEF’s controls over them: a model to be re-evaluated.

1. Introduction

In the 1990s Italy embarked – as a result of the creation of the single market European and the growing competition among EU member states – on a path of deep economic and financial reforms. This process led to the privatization of numerous public enterprises and entities, particularly in the credit sector; the main objective was to compensate – also involving certain private entities – for the shortcomings of the state, which was going through a real welfarecrisis (as well as to improve public finances with the proceeds realized from them).

The drive for privatization and subsidiarity led to the creation of banking foundations—nonprofit private entities granted statutory and managerial autonomy—intended to serve the public interest. In detail, the Amato Law established that banking foundations would arise from the transformation of public banks into private joint-stock companies (through the contribution of the banking business), leaving in their assets the holdings in the contributing banks.

The operation begun in the 1990s had – among others – the effect of “privatizing” the banks in view of the private nature attributed to the banking foundations. However, another purpose emerges from the regulations referred to, namely the possibility to achieve a clear separation between the lending activity (carried out by the bank) and that of disbursing funds derived from dividends in the investees for purposes of social benefit and economic promotion (carried out by the foundation).

In what follows, we will better outline the technical-legal aspects and steps that have characterized the aforementioned issues, although nowadays it is possible to emphasize how foundations of banking origin today represent an important instruments of economic and social policy, with a private legal form that facilitates their action (while remaining subject to supervision by the state through the Ministry of Economy and Finance).

This “hybrid” nature therefore characterizes the 86 Italian banking origin foundations, which have total assets of more than 40 billion euros.

More specifically, they invest in multiple financial activities (in fact, over time they have sold part of the holdings in the transferees and reinvested the proceeds in other companies) and use the profits from their investments to finance entities and associations active in various sectors, including culture, social welfare, volunteerism, research, local development, education and health: they are now a vital resource for the state’s social and cultural policies, capable of catalyzing new capital and, among other things, promoting public-private collaborations.

However, despite their fundamental role, some critical issues emerge from the analysis of their work, particularly considering the interference of local politics (e.g. the case of the Monte dei Paschi di Siena foundation) or a certain self-referentiality of their governance(for exemple the case of the CRT foundation of Turin to list one), aspects that evidently can distort their “social” mission.

Clearly, analyzing these aspects requires a broad perspective, integrating legal, financial, and economic considerations; with the awareness, therefore, of a necessary multidisciplinary approach, an attempt will be made to better frame certain critical issues of foundations of banking origin today, offering – as far as possible – some solutions to reason about.

•  A brief excursus on foundations: the first transformation of public banks into joint stock companies

A major reform of the banking system was introduced in Italy in 1936, which would regulate the credit sector for more than half a century, until the 1990s. This reform was based on a simple but important principle: to clearly separate short-term banking, that is, up to 18 months, from medium and long-term banking. The consequence was that the institutions operating on these different maturities had roles and distinct rules.[1]

Obviously, the idea behind this division was to protect savers, avoiding – as far as possible – the financial crises that had hit hard in previous years.

Banks in that period were divided into several categories. Among them, public chartered banks, such as Banca Nazionale del Lavoro, Monte dei Paschi di Siena and Banco di Napoli, represented the major groups.

Then there were banks of national interest, such as Banca Commerciale Italiana and Banco di Roma, savings banks, pawnshops, popular banks, rural and artisan banks, and ordinary credit companies. Some of these, including public institutions, savings banks and pawnshops, were also considered public banks.

As the 1990s approached, however, rules with reference to these institutions were changed. Indeed, Italy had to adapt to European directives and meet the challenges of the single banking market, which meant making Italian banks more competitive, efficient and able to hold their own against the large European institutions.

In order to achieve these goals, it was necessary to thoroughly upgrade the banking system nationaland, therefore, it was decided to transform public banks into joint-stock companies. This company type, in fact, allowed banks to overcome the limitations of temporal and operational specialization, strengthen their capital by issuing shares and grow through mergers, incorporations or acquisitions.

Transformation could take place in two ways: on the one hand, public banks could be transformed directly into joint stock companies while, on the other hand, it was allowed to spin off the banking business from the original institution and transfer it to a new or existing specially created joint stock company.[2]

It was through this second mode that banking foundations were born, which inherited the role and, more importantly, the assets of the original public institutions. Incidentally, the emergence of banking foundations at the very least led – given that in many cases the assets of public banks were not easily attributable to any owner – to “identify” a party to whom the stock of the banks transformed into joint-stock companies could be attributed.[3]

2.1.              Banking Foundations in Other Countries: A Comparative Perspective

The Italian model of banking foundations represents a unique institutional and legal construct that emerged from the privatization of public credit institutions, particularly in the 1990s. While no other country has developed an identical framework, several nations have implemented comparable structures that combine banking activities with philanthropic and social investment goals, albeit with significant differences in governance, regulatory oversight, and financial autonomy.

In Germany, the most comparable entities to Italian banking foundations are the Sparkassenstiftungen, foundations linked to the Sparkassen, or savings banks. Unlike the Italian case, where foundations were legally and structurally separated from their original banking institutions, the Sparkassen remain public entities, owned by municipalities and local governments[4]. Their associated foundations primarily focus on financing cultural, educational, and community-oriented initiatives, often reinvesting in the same geographical areas where the Sparkassen operate. This structure ensures strong local engagement but lacks the full financial and managerial independence characteristic of Italian banking foundations. Furthermore, German banking law maintains a strict separation between commercial and savings banks, preventing the privatization process that characterized Italy’s reforms.

In Spain, the transformation of the Cajas de Ahorros (savings banks) following the 2008 financial crisis led to the creation of Fundaciones Bancarias, institutions with functions similar to Italian banking foundations.[5] These Spanish banking foundations were designed to manage the assets of the former savings banks, ensuring that profits derived from their investments would be allocated to social projects. [6] However, the Spanish model remains in a state of transition, as many of these foundations still retain ownership stakes in their respective banking institutions. [7] Unlike in Italy, where legislative reforms progressively mandated the divestment of banking shares to ensure the full autonomy of foundations, Spanish law has allowed for a more gradual adaptation, maintaining some degree of institutional connection between the foundations and their former banks. [8]

In the United Kingdom, while there is no direct equivalent to Italian banking foundations, some financial institutions operate with comparable philanthropic purposes.[9] Building societies, which are member-owned financial institutions, allocate part of their revenues to community reinvestment and social projects. Additionally, charitable trusts established by large banking entities, such as the Lloyds Bank Foundation, serve as mechanisms for corporate social responsibility, directing funds toward public interest initiatives.[10] However, these entities differ significantly from Italian banking foundations in terms of governance, financial autonomy, and historical origins, as they were not the product of a mandated banking sector transformation but rather voluntary corporate-driven initiatives.

In the United States, a different but related model can be observed in the presence of bank-affiliated philanthropic foundations. Large financial institutions, such as JPMorgan Chase Foundation and Wells Fargo Foundation, have established substantial funds dedicated to social responsibility initiatives. Moreover, Community Foundations, which operate independently from banks, manage private and corporate donations to support public welfare projects.[11] Unlike Italian banking foundations, these institutions are not the result of a privatization process but rather voluntary philanthropic ventures by private entities. Additionally, U.S. financial regulation has historically encouraged the involvement of commercial banks in social investment through mechanisms such as the Community Reinvestment Act (CRA), which mandates financial institutions to invest in economically disadvantaged communities.[12]

From a comparative perspective, Italy’s banking foundation model stands out for its hybrid nature, balancing financial autonomy, philanthropic missions, and regulatory oversight. While Spain’s Fundaciones Bancarias come closest in structure and purpose, they have yet to achieve the same level of full independence from the banking sector. The German Sparkassenstiftungen maintain strong local engagement but lack the privatization element that characterizes Italian foundations.[13] In the UK and the U.S., banking-related philanthropy remains largely corporate-driven rather than a legally mandated transformation of public banking entities.[14]

The evolution of Italian banking foundations, shaped by the Amato Law (1990), the Ciampi Reform (1998-1999), and subsequent legislative interventions, reflects an institutional effort to ensure that former public banking assets continue to serve social and economic development objectives while maintaining financial sustainability. This dual function of asset management and social investment remains a distinctive feature of the Italian model, setting it apart from similar institutions worldwide.

• The regulation of foundations of banking origin

Upon closer inspection, it can be seen that foundations of banking origin have undergone significant regulatory developments since their establishment in the 1990s, through a series of legislative and regulatory interventions that have gradually defined their structure and purposes .[15]

The main provisions that governed their birth and, subsequently, their “evolution” are many and, at times, contradictory; among them it is worth mentioning:

• The Amato Law (Law No. 218 of July 30, 1990);
• The law and the Dini directive (Law 474 of July 30, 1994, and Treasury Directive of November 18, 1994);
• The Ciampi Law (Law No. 461 of December 23, 1998 and subsequent Legislative Decree No. 153 of May 17, 1999);
• The Tremonti Law (Law No. 448 of December 28, 2001);
• The Constitutional Court rulings (No. 300 and No. 301 of 2003);
• The Foundations Charter;
• The 2015 Stability Law (Law No. 190 of December 23, 2014;)
• The ACRI-MEF Memorandum of Understanding.

• The Amato-Carli Law and the creation of banking foundations

The Amato Law (Law No. 218 of July 30, 1990, and subsequent Legislative Decrees November 20, 1990Nos. of 356, 357 and 358)[16] represented the first phase of the transformation of the public credit system, providing the possibility for Savings Banks, Pawn Credit Banks and other public credit institutions to contribute the banking business to a joint-stock company (S.p.A.), receiving in exchange equity interests proportionate to the value of the contribution.

The original institutions were not abolished but rather transformed into foundations, which on one hand retained total control over the transferee companies and, on the other hand, assumed the purpose of pursuing socially beneficial purposes and promoting economic development.

The regulations gave wide decision-making autonomy to credit institutions, leaving it up to individual banks to decide whether or not to join the transformation process. In any case, the tax benefits provided for institutions that opted for transformation made this choice almost generalized.

The main objective of the law was to respect the original nature of public credit institutions, which were historically devoted to mutualistic and social purposes; for said reason, foundations could use the proceeds of their holdings exclusively in public interest activities while, in parallel, the new banking S.p.A.’s were (obviously) allowed to open up to private capital and begin a gradual enfranchisement from public control.

However, despite these intentions, the governanceof the transferee S.p.A.’s remained strongly conditioned by the transferee entities, whose composition saw a prevalence of members appointed by public administrations. This model of indirect control led to privatization that was more formal than substantive: the mere “transformation” of the legal status of these entities, in fact, was not sufficient at this early stage to achieve the goals hoped for by the Amato Law.[17]

• The Dini directive and incentives for divestment of holdingsbank foundations’

With Law No. 474 of July 30, 1994 and the Treasury’s directive of Nov. 18, 1994 (the so-called Dini directive), the legislature sought to strengthen the privatization process that had begun.

The rule abolished the requirement for foundations to hold a majority of voting rights in the shareholders’ meetings of the transferee S.p.A., and incentivized the sale of holdings through the tax exemption of capital gains obtained from sales.  To benefit from this tax-advantaged regime, however, foundations were required to reduce their holdings below 50 percent within five years from the date of approval of the directive.

However, it should be pointed out that even in this case the effectiveness of the measure was limited: the stringent rules on the use of divestment proceeds and the nature non-strictly binding of the directive led only a few entities to avail themselves of the incentives, which retained, in most cases, total or predominant control over the banking companies.[18]

• The Ciampi Law: the autonomy of Foundations and the privatization of banks

Carlo Azeglio Ciampi – with the law that bears his name – decided to carry out that process, initiated and not yet defined, of restructuring the national credit system.

And, in fact, Law No. 461 of December 23, 1998, and the subsequent Legislative Decree No. 153 of May 17, 1999, assigned complete managerial and statutory autonomy to banking foundations and, ultimately, transformed them into private-law entities: “foundations are private, nonprofit legal persons with full statutory and managerial autonomy“.[19]

Article 2 of the Ciampi Law, under the heading “Civil Regime of Entities,” also specified what should be the framework for  operation of the banking foundations ; in fact, they “a) pursue exclusively purposes of social utility and promotion of economic development, without prejudice to the tasks and functions attributed by law to other institutions; and b) devolve for purposes statutory in the areas referred to in paragraph d) a portion of income, net of operating expenses, tax charges and mandatory provisions and reserves (…)” .

More specifically, on the other hand, Legislative Decree No. 153 of May 17 1999 – by stipulating that banking foundations had to divest within four years from the holdings of the S.p.A. conferring companies [20] – allowed the latter to be able to engage in banking activities (again for a period of time not exceeding four years) pursuing mainly the objectives typical of private companies and aimed at improving operational efficiency, as well as increasing profit margins.

Having specified this, the Ciampi Law identified in Article 1(1)(d) of Legislative Decree No. 153 of May 17, 1999, the sectors of scientific research, education, art, preservation and enhancement of cultural and environmental goods and activities, health care and assistance to weak social categories as the relevant sectors among which foundations of banking origin could exercise (or, rather, finalize) their activities.[21] In this regard, foundations could provide “directly” respecting the purposes of statutory fulfillments (of social utility and promotion of economic developmentso-called operating foundations), or, more simply, they had the possibility of disbursing funds to nonprofit entities that operated in the sectors envisaged by the regulations (so-called grant-making foundations).[22]

It is therefore following the enactment of the Ciampi Law that began to take shape the the peculiar role of banking foundations, projected to have a function of a purely social nature. This process, indeed, was better also by the so-called Tremonti reform (which will be better referred to in the following section); in any case – as has been observed – their mission was modified to incorporate for them “legal or regulatory obligations regarding the mode of organization”.[23]

On the other hand, even the composition of the foundations’ bodies and their structures-provided for especially by the so-called Tremonti Law, which sees local authorities as important players with reference to the appointment of directors of banking foundations-would seem to corroborate the aforementioned civic and community role.

In addition, even the limitations provided in Article 6 of Legislative Decree No. 153 of May 17, 1999 (on the basis of wich, controlling interests are allowed only in companies and entities whose exclusive object is the exercise of undertakings instrumental to the purposes of foundations) bring foundations closer to “social holding companies,” in view of the spillover effects on the territories that dividends from (non-controlling) investments should have.[24]

In total, there are now about fifty instrumental companies, and generally their share capital is made up of resources earmarked for grant-making purposes and not from the investment of assets foundations’. With the same function as the instrumental companies, the so-called instrumental bodies (also identified by Article 1, paragraph 1(h) of Legislative Decree No. 153 of May 17, 1999) – i.e. instrumental operating bodies not structured in corporate form – have been established by some foundations. On the other hand, both companies and instrumental operating bodies are stipulated in the obligations to carry out their activities in a prevailing relationship with the reference territory Article 2 of Legislative Decree No. 153 of May 17, 1999.

However, it must be pointed out that-despite the intent to clearly separate the Ciampi Law foundations from the transferee banks-the former’s control over the latter remained still significant.

The reasons are to be found in the delay in the implementation of the obligation to dispose of shareholdings and, above all, in the rules of the foundations to appoint the members of the boards of directors of the investee S.p.A., which allowed them to maintain an indirect influence on the transferee banks (with reference to their management choices).

It should also be noted that the Ciampi Law certainly required foundations to divest their majority shareholding, although this diversification did not end their “special relationship” with the transferee banks. In fact, the rule did not set a precise value that was asset not to be exceeded and beyond which foundations could not concentrate their resources in the transferee bank: rather, it set a percentage limit in terms of shareholding in the corporate capital of the same credit institution (no more than 50 percent of the shares).

In short, it seems clear that in a context of concentration and efficiency in the banking sector, these rules do not seem to have hit the mark fully with reference to the sought-after divarication between the fate of foundations and that of the bankstransferee [25] . On the other hand, ten years after the Ciampi Law was passed, as many as 12 foundations held more than 50 percent of the shares in their respective transferee banks.

In fact, it was more like “the invisible hand” of the market that remedied some situations that were no longer sustainable (as in the case of the MPS foundation and Carige foundation, before the economic crises that affected their respective transferee), situations that strongly correlated the foundation’s assets to those of the banks. In the case at hand, the foundations of the two cities were affected by the losses of the transferee banks, which since 2010 have resulted in substantial write-downs to their assets until at least 2012 (today the foundations no longer have holdings in the two transferee banks).[26]

• Tremonti reform and the “republication” of banking foundations
  
  

Continuing the excursus that has characterized the evolution of the role of foundations of banking origin, it is worth noting Law No. 448 of December 28, 2001, known as the “Tremonti reform”. It introduced provisions aimed at bringing back into foundations the public sphere, giving them a dependence on regional legislative competence.

The reversal from the privatization enshrined in the 1998 by the Ciampi Law was evinced, in particular, by the changes made to their governanceaspect (that will be discussed below) and by the different operational purposes envisaged for foundations of banking origin.

In any case, the reform restructured the internal organs of foundations, which therefore turned out to consist of:

1. policy-making body, which was responsible for strategic tasks such as planning goals, approving and amending bylaws, managing assets and investment policy, and approving the budget;
2. administrative body, responsible for day-to-day management;
3. control body, with supervisory and oversight functions.

In particular, the Tremonti reform affected the composition of the governing body, stipulating that the majority of its members be appointed by representatives of territorial entities under Article 114 of the Constitution (municipalities, provinces and regions): this provision limited the autonomy of foundations and strengthened their evidently ties to public institutions.

In addition, the legislation redefined the operating scope of foundations, narrowing activities to four macro-areas of intervention: i) family, education, volunteerism, welfare and charity; ii) prevention, safety, development and public health; iii) research and environment; and iv) arts and cultural heritage.

Foundations were required to focus their activities on one to three designated sectors, reinforcing their commitment to public interest objectives. In short, the governance changes mentioned above betrayed an obvious intent of “republicanization,” leveraging an institutional model evidently closer to public management or, at least, of a mixed character.

• The conflict of competencies and the reform of Article V of the Italian Constitution.

The attribution of the nomination of the largest number of members of the governing bodies of foundations of banking origin by local authorities (regions, provinces, municipalities) also raised questions of legislative competence.[27]

In this regard, several regions claimed also a regulatory role over foundations, referring to the reform of Title V of the Constitution (Constitutional Law Oct. 18, 2001, No. 3), which had given the regions concurrent competence over “Savings banks, rural banks, agricultural and land credit companies and institutions having a regional character “.

It is therefore for this reason that the Regions, mistakenly considering the foundations of banking origin still connected to the credit system, made greater regulatory and policy claims on them.

• Constitutional Court Decisions No. 300 and No. 301 of 2003.

The Constitutional Court, in Judgments No. 300 and No. 301 of Sept. 29, 2003, ended this conflict by reaffirming the private-sector nature of foundations of banking origin.

In Judgment No. 300/2003, the Court declared that the process of transforming public credit institutions into foundations, initiated in 1990 and completed with the 1999 reforms, had brought to full completion their detachment from the banking system. Foundations, to be regarded as private nonprofit legal persons, fell thus under the exclusive jurisdiction of the state in matters of civil law, pursuant to Article 117, second paragraph, of the Constitution.

In Judgment No. 301/2003, on the other hand, the Court sanctioned the constitutional illegitimacy of the provisions that provided for a prevailing representation of territorial entities (within the meaning of Article 114 of the Constitution) in the governing bodies of foundations, stressing the need for a balanced representation of public and private entities expressive of local realities. It also declared illegitimate the provision of binding powers of direction given to the Supervisory Authority over the same entities.[28]

In short, the pronouncements of the Constitutional Court nullified the cornerstones of the “Tremonti reform”, definitively confirming the private-sector nature of foundations of banking origin and their status as entities outside the banking system. Their autonomy was definitively recognized, consolidating the reform path that has begun with the Amato-Carli law and that has culminated in the Ciampi law.

The attempted “republication” thus ended with a return to the private arrangement, legitimized by the Supreme Court.

Also according to the Constitutional Court, the Ciampi Law had definitively dissolved the tie that initially bound foundations to the conferring banking company: in fact, the definition of “foundations of banking origin” and no longer of “transferring entities” or “banking foundations” seems more appropriate for them.[29]

Summarizing, the legislative evolution that has taken place since the implementation of the Amato Proxy Law “has broken that ‘genetic and functional bond’ referred to in Judgments No. 341 and No. 342 of 2001 of this Court, a bond that originally bound the conferring public entity and the banking company, and has transformed the legal nature of the former into that of a private non-profit legal person (Article 2, paragraph 1, of Legislative Decree No. 153) of whose nature the control of the banking company, or even only the participation in its capital, is no longer a  characterizing element ” [30].

• The charter for foundations: the rules of self-discipline

The charter for foundations, adopted by the Association of Foundations and Savings Banks S.p.A. (ACRI) in 2012, is a fundamental document aimed at outlining principles and rules of conduct for foundations of banking origin. Although it does not hold binding regulatory status, it becomes mandatory for foundations that decide to incorporate it into their statutes, thus assuming legal significance as an internal regulatory act.

The Charter, which is divided into three main areas (governance, institutional activities and asset management), is designed as a tool to ensure transparency, effectiveness and balance in the management of foundations of banking origin.

Specifically, the three recalled areas deal with the following topics:

1. Governance: principles of competence, independence and transparency;

The section on governanceintroduces essential provisions to ensure that the governing and supervisory bodies of foundations are composed of qualified, independent individuals free of conflicts of interest. These principles aim to safeguard the autonomy of the entities by providing, among other things, professionalism requirements for directors, transparent procedures for their appointment, and a clear separation between the respective functions of the governing, management, and supervisory bodies.

Compliance with these rules is crucial to preserve the institutional autonomy of foundations, protecting them from external influences, whether political or economical, which could compromise the fulfilment of their statutory purposes. The charter also emphasizes the principle of representativeness, ensuring that strategic decisions reflect the interest of the communities they serve.

1. Institutional activities: pursuit of socially useful purposes;

The institutional activities of foundations are governed by rules that ensure their consistent pursuit of the purposes of social benefit and promotion of the economic development of the relevant territory. The charter stipulates that these activities are carried out in full autonomy and according to criteria of transparency, effectiveness and subsidiarity.

With this in mind, foundations are required to define operational strategies in line with the needs of the local area, giving priority to the use of resources in projects with a high social impact and lasting repercussions. The principle of subsidiarity, in particular, requires foundations to intervene not as a substitute for, but as a complement to, the action of the state and other institutional or private entities. Procedural transparency is also guaranteed by the adoption of objective criteria in the selection of projects to be funded, avoiding discretion or favoritism.

1. Asset management: protection and enhancement of assets;

The assets of foundations of banking origin represent the essential basis for their long-term sustainability. The Charter regulates asset management, imposing criteria of prudence, diversification and sustainable profitability in order to preserve its real value and ensure adequate resources for the pursuit of institutional purposes.

In particular, the document enshrines the obligation to avoid excessively risky investments and to manage in a balanced manner the relationships with the transferee banks, which, in the past, were often subjected to control by the foundations themselves. The regulations introduced by the charter reiterate the need for a clear distinction between the roles of shareholders and lenders, excluding undue interference in the management of lending institutions.

• Additional legislative and regulatory interventions: the 2015 Stability Law and the ACRI-MEF Protocol

The regulations inherent in the asset management of foundations were further affected by the 2015 Stability [31] , a provision that introduced increased taxation on dividends received by foundations as well as imposed – as a consequence – an adjustment of investment strategies to ensure economic efficiency and compliance with statutory purposes.

At the same time, the 2015 Memorandum of Understanding between ACRI and the Ministry of Economy and Finance provided additional constraints, such as the prohibition of concentrating more than one-third of assets in a single entity and the use of complex financial instruments only for risk hedging purposes.[32]

Specifically, foundations were given three years to divest excess investments assuming they were in a listed entity, or five years in case they were in other unlisted banks.

These provisions have certainly strengthened control over the management choices of foundations, as well as promoted greater transparency in their activities, including through the requirement to publish financial statements, internal regulations and curricula of members of administrative bodies.[33]

This is a step forward especially with reference to the limited effects of the provisions of the Ciampi Law and which, in fact, photographs the current situation of Italian foundations. The agreement between ACRI and the Ministry, evidently outside the scope of impositive attitudes toward foundations of banking origin, has the merit of having “detached”, at least partially, the destiny of the foundations themselves from that of the transferee banks.

• The new role of foundations as actors in the third sector

The aforementioned reforms gradually redefined the role of foundations, increasingly separating them from banking activities and consolidating their identity as independent philanthropic entities. The goal was “simple”: to enable the foundations themselves to manage their own assets only with a view to better returns to be allocated to their target territories, avoiding commingling with the transferee banks.

As noted, the crisis in the banking system and regulatory developments have accelerated this process, leading many foundations to reduce or divest their shareholdings in the original lending institutions.

Today, foundations of banking origin are configured as private entities with a public purpose, capable of combining managerial autonomy and social responsibility.

In this regard, it was noted that the Charter Foundations and subsequent regulatory amendments represent indispensable tools for ensuring compliance with these principles, strengthening the role of foundations themselves as pillars of the third sector and promoters of sustainable territorial development.

In short, foundations do indeed carry out business activities,[34] but aimed at the pursuit of activities in the general interest of the third sector [35]: in fact, the latter is seen as a sphere broader of mutuality and cooperation, an area of the “private social sector” that should better enable the connection between civil society and institutions.[36]

Or at least that is what banking foundations today should be according to the wishes of the legislature.

• The legal structure of foundations and the MEF’s controls over them: a model to be re-evaluated?

Yet, this complex path – however positive in my opinion – is periodically criticized; Obviously, every moment of crisis or scandal is “used” – sometimes even in an instrumental way – to question the role of foundations.

The latest case of some importance is, as is well known, that relating to the CRT Foundation in Turin, an affair that led to the resignation first of the secretary general and then of the president of the institution.[37]

On the other hand, as mentioned above, foundations today have assets of more than 40 billion euros, a sum that some believe should be nationalized, at least respecting its “provenance” . Obviously, with a public debt of now 3 trillion euros [38], the realization of the assets of the foundations could represent an important revenue for the state, provided that there are no plans to use the foundations’ assets to support other companies in public hands or financial operations of national importance.[39]

Undoubtedly, the structures of the foundations should be better defined and, above all, better monitored in terms of their performance (which should at least equalize some market benchmarks), but I believe it is not appropriate to exceed in extremely negative evaluations of the role of the same fondations.

Based on this assumption, I believe that certain problematic issues could be addressed on the one hand by reevaluating the legal structure of foundations (under which, of course, there is no shareholder who can directly intervene in the case of negligent actions of the governing body) and, on the other hand, in view of their private nature, which in fact-for the same reasons-puts the trustees in a situation in which they are unlikely to be accountable for their (incorrect) actions except in cases of enormous seriousness of it.

In short, if there is no subject who can effectively exercise the action of liability against directors (and board members) of foundations of banking origin[40], let at least this form of control be ensured by the “Corte dei Conti”, a control that should develop in two directions: on the one hand, the prudent management of the invested assets (which, it should be remembered, has a “public” origin) in order to obtain adequate dividends and, on the other hand, the use of the same financial proceeds on the territory with logical rationales in terms of spillover, without waste and respecting a coherent planning.

Obviously, the fact that politics decides – at least indirectly – the majority of the names of the corporate bodies (and, in anticipation, this will be more and more the case) should corroborate the reasoning mentioned above of a necessary accounting control over the actions of the directors.^[41]

Again, one could imagine applying to foundation all  – or at least part of  – the requirements set out in Minister of Economy and Finance Decree No. 169 of Nov. 20, 2020, which regulates the requirements for corporate officers of banks as well as other entities operating in the financial sector: it would raise the quality level and independence of foundation officers, including from “politics”.

Moreover – this should also be pointed out – despite their legal form, banking foundations have not been fully brought under the common law regime provided for private foundations by Book I of the Civil Code, whose regulations apply only residually.[42] Moreover, the Third Sector Code does not apply to them, as stipulated either in Article 3 of the same Legislative Decree 117/2017. Perhaps it should be better clarified once and for all and more precisely what rules apply to them, possibly with a single special discipline in light of their unique peculiarities.

With reference to the supervision of them, the responsibility identified in the MEF appears  today contradictory, considering that the Ciampi Law not only eliminated the necessary link between foundations and the credit system, but more importantly, it also mandated the divestment of controlling stakes in banks.

Ultimately, I do not believe that today one can justify the control carried out by the MEF on the basis of the now non-recurring holding of control of a transferee bank (for reasons of stability of the credit system)[43] or, again, considering it as “substitute” for the supervision provided by Book I of the Civil Code for foundations, an activity that, as a rule, should be carried out by an independent authority.

Of course, ministerial control could also be based on the general interest pursued by foundations arising from the non-private origin of their assets and the public nature of the purposes they must pursue (as opposed to what can normally happen in private foundations), however, given also the financial aspects that characterize their management and operations, said role could perhaps be delegated to other Supervisory Authorities (certainly, Banca d’Italia could better assess internal arrangements and return on investments).[44]

In any case – and as noted – foundations of banking origin represent a reality of considerable importance in the economic and social system, although they are still characterized by legal ambiguities that could lead, among other things, to potential risks of conflict between private and public interests and, as in some contexts seems to have occurred, to situations of ungovernability.

If this were to happen (rectius, when this happens), the socially useful purposes that should be pursued could be compromised, as well as undermining transparency and trust in the economic-financial system of our country.

Therefore, if a “check” 35 years after the establishment of foundations of banking origin may seem useful, however, I believe that their role should not be distorted (even more, in a period in which the State and local authorities have increasing difficulty in providing quality services to citizens).

Therefore, I believe that what is stated in Article 2, paragraph 1, second sentence, of Legislative Decree May 17,  No. 153 of 1999, which qualifies them as owners of assets intended for purposes of social utility and the promotion of economic development, is still current and valuable; if anything, foundations would need some sort of further operational restylingin order to make them – as far as possible – better managed and ultimately, more efficient. 

References

Abbadessa P (2010) Fondazioni e governance delle banche. Giappichelli, Turin

Amorosino V (2013) Le attività di impresa delle fondazioni di origine bancaria. Edizioni Scientifiche Italiane, Napoli

Barbetta G (2002) Il ruolo delle fondazioni bancarie nel finanziamento delle imprese sociali. In: Cafaggi F, Modelli di governo, riforma dello stato sociale e ruolo del terzo settore. Il Mulino, Bologna, 341-359

Bierman L,   Fraser D R, Zardkoohi A (1994) Community Reinvestment Act: A Preliminary Empirical Analysis, Hastings L.J.  45(3), 383,  available at: https://repository.uclawsf.edu/hastings_law_journal/vol45/iss3/10

Clarich M, Pisaneschi A (2001)Le fondazioni bancarie. Dalla holding creditizia all’ente non-profit. Il Mulino, Bologna

Conetti M (2021) L’operatività della fondazione di origine bancaria, available at https://www.diritto.it/loperativita-della-fondazione-di-origine-bancaria/

Costa S (2020) Organizzazione dei servizi di investimento e rapporti con la clientela. Giuffrè, Milano

Cyrus R. Vance Ctr. for Int’l. Just., (2021) Public Banking Around the World: A Comparative Survey of Seven Models 3, available at: https://www.vancecenter.org/wp-content/uploads/2021/10/Public-Banking-Around-the-World-A-Comparative-Survey-of-Seven-Models.pdf

Cusa E (2014) Le forme di impresa privata diverse dalle società lucrative tra aiuti di Stato e Costituzioni economiche europee. Giappichelli, Torino

de Andres P, Garcia-Rodriguez I,  Romero-Merino M E,  Santamaria-Mariscal M (2022) Stakeholder Governance and Private Benefits: The Case of Politicians in Spanish Cajas, J. Bus. Rsch. 144, 1272-1292

De Stasio V (2022), Fondazione (di origine) bancaria (FOB) e terzo settore. Appunti, Banca, borsa, tit. cred., 4, 523-548

Fortunato S (2003) L’autonomia statutaria delle fondazioni bancarie, Banca, borsa, tit. cred., 1, 1-21

Granelli C (2018) Impresa e terzo settore: un rapporto controverso. Jus civile, 5, 715-735

Guaccero A (2002) Gli organi delle fondazioni. Banca, borsa, tit. cred., 6, 753-792

Hidalgo Romero R, Piazza Dobarganes L (2013) Consideraciones preliminares sobre la regulación proyectada de las fundaciones bancarias, Revista aranzadi doctrinal, 11, 27-36

Lipari N (2024) Il terzo settore tra gratuità e cittadinanza. Cacucci, Bari

Malloy M P (2006) Towards a National Community: The CRA and the Contemporary Market, W. New Eng. L. Rev., 29, available at: https://digitalcommons.law.wne.edu/lawreview/vol29/iss1/3

Martínez Muñoz M (2016) An approach to the regulation of spanish banking foundations, Journal of Law and Commerce, 34(2), 325-353

Mayer C, McCann P, Schumacher J (2021) The Structure and Relations of Banking Systems: The UK Experience and the Challenges of “Levelling-Up”, Oxford Rev. Econ. Pol., 37(1), 152-171

Merusi F (1990), Dalla banca pubblica alla società per azioni (Fantasia medioevale semiseria ad uso di un viaggiatore persiano). In Cirenei M T, De Martin G C, Il sistema creditizio nella prospettiva del mercato unico europeo, Giuffrè, Milan, 37-65

Merusi F (2004) La privatizzazione per fondazioni tra pubblico e privato, Dir. Amm., 3, 447-512

Meruzzi G (2016) Adeguatezza della struttura organizzativa e corretta amministrazione delle fondazioni di origine bancaria nel Protocollo ACRI/MEF, In: Sala G, Meruzzi G, Le fondazioni di origine bancaria verso l’autoriforma Il Mulino, Bologna, 129-154

Mucciarelli G (2005)Attività e impresa nelle fondazioni bancarie, Milano

PastoriG (1997) Le fondazioni bancarie: aspetti istituzionali, assetto organizzativo e controlli, Banca, impr. soc., 3, 495-506

Portale G B, Fondazioni «bancarie» e diritto societario, Riv. soc., 1, 25-35

Tamponi M (2018) Persone giuridiche, sub art. 11. In: Busnelli F D, Il Codice civile. Commentario, Giuffrè, Milano, pp. 1-538

Pisaneschi A (2020) La Cassa Depositi e Prestiti: holding di partecipazioni, banca nazionale di promozione o operatore del turnaround industriale, il caso.it, 3 November, 1-24, available at www.ilcaso.it

Riganti F (2016) Brevi note sulle fondazioni di origine bancaria a seguito del protocollo di intesa Mef/Acri del 22 aprile 2015, Le nuove leggi civ. comm., 1, 167-184

Rossi G (2003) Le fondazioni di origine bancaria tra pubblico e privato: nota a Corte cost., sentenza 29 settembre 2003 n. 300,Giur. cost., 5, 2606-2618

Rubio Torrano E (2013) Fundaciones bancarias y cajas de ahorros, Revista doctrinal aranzadi civil-mercantil 31(6), 31-34

Sanasi D’Arpe V (2016)La gestione patrimoniale nelle fondazioni bancarie, Nuovo Diritto delle Società, 3, 9-16

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Vella F (2016) Il Protocollo d’intesa ACRI/MEF e la nuova governance delle fondazioni bancarie, In: Sala G, Meruzzi G, Le fondazioni di origine bancaria verso l’autoriforma, Il Mulino, Bologna, 113-129

Véron N (2020) Banking Regulation in the Euro Area: Germany is Different, Peterson Inst. For Int’l. Econ., May 11, https://www.piie.com/blogs/realtime-economic-issues-watch/banking-regulation-euro-area-germany-different 

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[1] Among other things, to ensure the stability and soundness of banks, it also imposed a ban on lending institutions investing directly in industrial enterprises.

[2] Merusi (1990), pp 37-38.

[3] Clarich-Pisaneschi(2001), p 39.

[4] Véron (2020).

[5] Rubio Torrano (2013), pp 31, 34.

[6] The management and oversight of Cajas were historically controlled by the central government. However, as Spain became more democratic, responsibility gradually moved to the country’s autonomous regions. On this point see Martínez Muñoz (2016), 325.

[7] Pablo de Andres et al. (2022), pp 1272-1273.

[8] Hidalgo Romero, Piazza Dobarganes (2013), p 29.

[9] Mayer et al. (2021), p 162-164.

[10] Ibid., 152, 160.

[11] Community foundations play a vital role in the philanthropic landscape of the United States. Across the country, 750 such foundations collectively manage approximately $85 billion in assets. For further informations on this point see Colinvaux (2018), p. 10.

[12] Bierman et al. (1994) 

[13] Cyrus R. Vance Ctr. for Int’l. Just., (2021) Public Banking Around the World: A Comparative Survey of Seven Models 3, https://www.vancecenter.org/wp-content/uploads/2021/10/Public-Banking-Around-the-World-A-Comparative-Survey-of-Seven-Models.pdf 

[14] On this point see Singleterry, Christodoulou (2017).

[15] On the origin of banking foundations, see, ex plurimis, Mucciarelli(2005), pp7-9; Clarich-Pisaneschi (2001), pp. 19-20; Amorosino (2013), pp 15-18.

[16] Named after the name of the Treasury minister of the time.

[17]  It has been pointed out in this regard that the path envisaged by Law No. 218 of July 30, 1990, and Legislative Decree No. 318 of November 20, 1990, “had immediately appeared, rather than a real process of privatization of the banking system, to be a kind of covert publicization of the credit system, so much so that the legislature had almost immediately attempted to soften the mechanism“. See Tamponi (2018), p 28.

[18] On this topic see, among others, Pastori (1997), pp 496-499.

[19] Stated in Article 2 of Legislative Decree No. 153 of May 17, 1999.

[20] The shareholdings that gave control of the transferee banks had to be divested by December 31, 2005, an obligation from which, in 2003, only foundations with assets not exceeding 200 million euros and those based were exempted in italian special statute regions. See Abbadessa (2010), p 28.

[21] For a more in-depth examination see Conetti(2021).

[22] Sanasi D’Arpe(2016).

[23] De Stasio (2022), p 528; Costa (2020), p 142.

[24] Specifically, pursuant to Article 6, paragraph 4, Legislative Decree No. 153 of May 17, 1999, as of the entry into force of the decree, “foundations may not acquire new controlling interests in companies other than those referred to in paragraph 1 (the companies and instrumental entities, ed.) or retain interests controlling already held in the companies themselves, without prejudice to the application of the provision of the provision of Article 25,” relating to the transitional period until December 31, 2005. Obviously, the companies and entities instrumental are thus considered as they are functional in carrying out the foundations’ mission, in the various fields of activity permitted by law. On this point see Barbetta (2002) pp 355-357.

[25] Nor it can be said that the coercive measures provided for in the Ciampi Law, according to which foundations with more than 50 percent shareholdings in the transferee bank would be subjected to receivership if they did not divest their majority shareholding within six years (thus no later than 2006), had any effect.

[26] Banca Carige ceased operations following its merger into BPER Banca on November 28, 2022. MPS, on the other hand, was rescued from bankruptcy by the Italian State, and the MPS foundation’s holdings were drastically downsized (today, the foundation MPS holds 0.40 of banca MPS, while at the time of the events it held 45.9 percent of the MPS bank’s ordinary shares, concentrating 87.2 percent of its total assets there).

[27] Fortunato (2003), p 32.

[28] Rossi (2003), p 2606.

[29]  Scotti (2020), p 227; Merusi (2004), pp 447-448.

[30] Thus Constitutional Court, Sept. 29, 2003, no. 300. Also from the same judgment, it is perceived how the Constitutional Court considers the concludedprocess of transforming banking foundations into legal persons under private law with statutory autonomy and with the purpose of social utility to be : foundations are in fact to be placed “among the subjects of the organization of ‘social freedoms’ (judgment No. 50 of 1998), not of public functions, albeit within limits and controls compatible with that character“; and this is because they fall “within a notion, however broad it may be, of public administration in the subjective and objective sense“.

[31] Namely, Law No. 190 of December 23, 2014.

[32] On the protocol ACRI/MEF see Vella (2016); Meruzzi (2016) pp 129-132; Riganti (2016), pp 167-169.

[33] Specifically, Article 11, paragraph 3 of the Protocol stipulates that banking foundations must indicate “on their websites the procedures through which third parties can make requests for financial support, indicating the conditions of access, the selection criteria and the process through which the selection of initiatives takes place, as well as the outcomes of the same.” On the transparency of the decisions of foundation trustees (and the fact that they should not, among other things, be able to vote by secret ballot) see Viotti (2019).

^[34] Portale (2005), p 24.

[35] Although the specific Code does not apply to them, according to Article 3 of the same Legislative Decree 117/2017.

[36] As pointed out by the Constitutional Court, third sector entities are representative subjects of the solidarity society, constituting “on the territory a capillary network of closeness and solidarity, sensitive in real time to the needs that come from the social fabric” (thus Constitutional Court, July 1, 2020 no. 131). On the topic see also Cusa (2013); Lipari (2024).

[37] The case can be summarized as a “hidden pact” among some members of Fondazione CRT’s board of directors, with the intention of influencing appointments in companies and investee entities. The affair also resulted in a series of complaints to the Turin Public Prosecutor’s Office and, according to some journalistic reconstructions, the foundation risked being placed under commission by the MEF. At the time of writing, the situation has been recomposed with the election of a new president and a declared willingness to amend the bylaws by providing for greater controls over the directors.

[38] Not to mention, of course, ACRI’s control over Cassa Depositi e Prestiti, amounting to about 15 percent of its capital during the period when Giulio Tremonti was Minister; in fact, Cassa Depositi e Prestiti was transformed into a joint-stock company by Decree-Law No. 269/2003 and, following its privatization, was partly sold by the state to the foundations of banking origin through ACRI (at the time, the shares acquired were the 30 percent of the capital). Ultimately, part of the foundations’ resources were directed to the infrastructure sector (given CDP’s operations): the State, therefore, could finally make up for the shortcomings of the public budget by making full use of the resources of the foundations themselves. On this point see Pisaneschi (2020), p 5.

[39] In this regard, it cannot but be noted that several foundations hold significant stakes in the share capital of the Bank of Italy. Notable among them are Fondazione Cariplo (with 6,000 shares out of 300,000 total), Fondazione Compagnia di San Paolo (3,000 shares), and Fondazione Pisa (the heir of Cassa di Risparmio di Pisa, with 1,600 shares). On this topic see Troiano (2014), pp 103-105.

[40] According to Guaccero, the liability action could be brought by the new governing body against the old one, in light of the analogical application of Article 25(3) of the Civil Code (according to which, in common law foundations; actions against the previous directors for facts concerning their liability may be brought by the new directors). See Guaccero (2002), pp 773-775.

[41] Moreover, it should be noted, especially in the past, that there has been a certain alternation of personalities who have transited from institutional positions to the boards of banking foundations to the top management of transferee banks, and vice versa.

[42] As has been pointed out, their special law (Legislative Decree No. 153 of May 17, 1999) and, as a supplement, the general rules of the Civil Code, to which refers Article 29 of Legislative Decree No. 153/1999 ; doubts exist with reference to the application of all the rules of Book I of the Civil Code and also those of Book V . See De Stasio (2022), p565; Granelli (2018), p 716.

[43] On this regard, a decision of the Council of State reaffirmed the continuing control of the Ministry of the Treasury (now merged into the MEF) in a case where a (former) banking foundation had disposed of its entire stake in the transferee bank; see Cons. State, sec. IV, Sept. 13, 2011, no. 5118.

[44] In fact, supervision by the Banca d’Italia would be abstractly possible where foundations still held controlling stakes in the transferee banking company: pursuant to Article 65(1)(h) of Legislative Decree No. 385 of September 1, 1993, companies that control a bank to are subjected to the supervision on a consolidated basis by Banca d’Italia. Obviously, this would be a broad interpretation of the term “company,” such that it would also foundations include of banking origin.

Author

Giuseppe Antonio Policaro is Associate Professor of Commercial Law at the University of Turin – giuseppeantonio.policaro@unito.it