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New code of conduct for Italian banks regarding corporate restructurings

On April 9 2000 the Italian Banking Association adopted a code of conduct to be followed by Italian banks and financial institutions when involved with companies in financial difficulties. The new code received the approval of the Bank of Italy from an antitrust perspective.

The main rules of behaviour to be followed by Italian banks and financial companies identified by the code of conduct are the following:

  • transparency and correctness in the relationships among banks and financial institutions and towards the client, favouring uniform contractual agreements;
  • cooperation and fairness towards other creditors of the same company;
  • participation in the new financings to be made available to the client on the basis of transparency and of objective criteria;
  • procedures aimed at reducing administrative costs;
  • prohibition of keeping separate tables for negotiations;
  • constant updating of the parties involved; and
  • recourse to arbitration in the event of possible disputes pertaining to the application of the code of conduct.

The procedure regulated by the code of conduct is applicable on a voluntary basis in the event of companies experiencing severe financial problems and having an exposure to the banking system of at least L30 billion ($14.3 million). The procedure may be initiated with the consent of the company involved.

The new code of conduct, although not supported by specific legislation, undoubtedly represents an effort towards establishing a uniform approach among categories of creditors.

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