Finance and Banking in Italy

Learn about Italy’s finance and banking system, including its history, regulation, and significant players. This informative guide will help you understand the Italian financial market and make informed investment decisions.

Italy has a long and rich history of finance and banking, dating back to the Renaissance period. Today, the Italian financial system is one of Europe’s largest and most sophisticated, with a wide range of financial institutions and markets. 

Whether you’re a seasoned investor or a newcomer, understanding Italy’s finance and banking system is vital for making well-informed decisions in this dynamic and ever-changing sector— Discover Italy’s interesting financial and banking system and understand why it’s important today in this helpful guide.

The Banking System

The Banking system is like a financial guardian for Italy, making sure everything with money runs smoothly in the country and within the group of euro countries. Since the mid-1990s, the number of banks in Italy has decreased significantly due to mergers, acquisitions, asset transfers, bankruptcy, and conversions of banks into financial companies, which accounted for 60% of all banking assets in the country. There were previously about 1,000 banks in Italy. 

Types of Banks

The Italian banking system is composed of commercial banks, savings banks, cooperative banks, and investment banks. 

National Italian Banks

Italy is home to a diverse banking sector featuring national and international players. National Italian banks are at the core of the country’s financial landscape. These banks have a strong presence across Italy, serving individuals, businesses, and the government. Some prominent national Italian banks include:

  • UniCredit: UniCredit is one of Italy’s largest and most significant banking institutions. With a rich history from 1870, UniCredit has a vast network of branches in Italy and internationally. It offers various financial services, including retail and corporate banking, asset management, and investment banking.
  • Intesa Sanpaolo: Intesa Sanpaolo is another major player in the Italian banking sector. Founded in 2007 through the merger of two historic banks, it is known for its comprehensive services, spanning retail and commercial banking, insurance, asset management, and wealth management.
  • Banca Monte dei Paschi di Siena (BMPS): As one of the oldest banks globally, BMPS was founded in 1472 and is headquartered in Siena, Tuscany. It holds the distinction of being the world’s oldest surviving bank. BMPS provides a wide range of banking services, primarily in Italy, focusing on retail and commercial clients.

Cooperative Banks

Cooperative banks, or credit cooperatives, are a unique feature of Italy’s banking landscape. These banks are owned and operated by their members, often residents, businesses, or institutions. They prioritize community development and financial inclusion. Key cooperative banks in Italy include:

  • Banca Popolare di Milano: Founded in 1865, Banca Popolare di Milano is one of the largest cooperative banks in Italy. It has a strong presence in Lombardy and Northern Italy, offering its members various financial products and services.
  • Banca Popolare dell’Emilia Romagna (BPER Banca): BPER Banca is a cooperative bank headquartered in Emilia-Romagna. It has a network of branches serving local communities and providing traditional banking services.

International Banks

Italy also hosts a variety of international banks that operate within its borders, catering to domestic and international clients. These banks bring global financial expertise and services to Italy. Some notable international banks in Italy are:

  • Deutsche Bank: Deutsche Bank is a prominent international bank with a strong presence in Italy. It offers various financial services, including investment banking, wealth management, and corporate banking.
  • BNP Paribas: BNP Paribas is a central French multinational bank with an extensive presence in Italy. It provides individuals and businesses with comprehensive banking and financial solutions.

Savings and Investment Banks

Savings and investment banks in Italy focus on wealth management, asset management, and investment advisory services. They cater to clients looking to grow and preserve wealth through various investment strategies. Some notable savings and investment banks include:

  • Banca Generali: Banca Generali is a leading Italian private bank specializing in wealth management and financial planning. It offers personalized investment solutions and advisory services to high-net-worth individuals.
  • Mediobanca: Mediobanca is an Italian investment bank known for its expertise in corporate finance and investment advisory services. It assists clients with mergers and acquisitions, capital raising, and other financial transactions.

Digital Banks

Italy’s banking sector has witnessed the emergence of digital banks, which operate entirely online and offer convenient, tech-driven financial services. These banks have gained popularity among tech-savvy consumers. Some noteworthy digital banks in Italy are:

  • N26: N26 is a German-based digital bank with a significant presence in Italy. It provides mobile banking services focusing on simplicity and convenience, making it an attractive choice for digital-savvy customers.
  • Hype: Hype is an Italian mobile banking platform offering various digital financial services. It targets a younger demographic with features like prepaid cards and digital wallets.

How to open a bank account in Italy?

Opening a bank account in Italy can differ depending on your chosen bank. Some banks might ask you for residence, while others are more flexible and allow non-residents to open accounts. Some banks will allow you to open your account online, or you will have to go to a bank branch in person.

Here are the typical requirements to open a bank account in Italy:

  • Have a valid passport or a government-issued photo ID.
  • You’ll also need a residence permit if you’re living in Italy. 
  • Italian Tax Number, also known as a “Codice fiscale”

There can be further requirements based on the type of account you’re opting for. So, before you head to the bank, make sure you have these essential documents handy, and check if there are any specific requirements from the bank you choose.

Financial System

The financial system of Italy is a crucial pillar of its economy, characterized by a diverse range of institutions and services. The Bank of Italy (Banca d’Italia), the central bank that supervises the country’s monetary policy and banking system, is the primary regulatory authority overseeing Italy’s financial sector. The Bank of Italy is responsible for ensuring the financial system’s stability and integrity, safeguarding the currency’s value, and promoting economic growth through prudent monetary policies.

In addition to the Bank of Italy, another key regulator is the Italian Securities and Exchange Commission (CONSOB – Commissione Nazionale per le Società e la Borsa). CONSOB regulates the securities market, protects investors, and ensures transparency in financial markets. It oversees activities related to securities trading, mergers and acquisitions, and the disclosure of financial information by listed companies.

Responsibility of banks in Italy

Banks play a vital role in the economic landscape of Italy, contributing to various aspects of financial stability and government operations. Here are the roles that banks perform in the country, notably the Bank of Italy.

The Bank of Italy is the central bank of Italy and is responsible for monetary policy, banking supervision, and financial stability. 

Ensuring Price Stability

One of the crucial responsibilities of the Bank of Italy is its participation in Eurosystem monetary policy decisions. The Governor of the Bank of Italy is a critical figure in the Governing Council of the European Central Bank (ECB). This participation allows the Bank of Italy to influence and contribute to the Eurozone’s monetary policies.

Economic Analyses

The Bank of Italy’s staff conducts in-depth economic analyses that provide valuable insights for discussions within the ECB. These analyses contribute to the decision-making process in the Governing Council and the various technical committees and working groups within the Eurosystem.

Securities Placement

The Bank of Italy is a critical link between the government and financial markets. It facilitates the placement and servicing of public securities on the domestic market. Additionally, it acts as a fiscal agent for securities issued on international markets. This role is instrumental in managing Italy’s public debt.

Collaborative Debt Management

The Bank of Italy is pivotal in formulating debt issue policies in collaboration with the Ministry for the Economy and Finance. It also prepares alternative financing plans to meet borrowing needs through securities issuance. This collaborative effort helps ensure effective debt management and sustainable fiscal policies.

Yield Calculation

The Bank of Italy is responsible for calculating and periodically publishing the average weighted yield of a specific basket of government bonds known as ‘Rendistato.’ This information is crucial for investors and policymakers as it reflects the performance of government debt with a residual life of more than one year.

Handling Government Finances

Acting as the treasurer for the State, the Bank of Italy manages the financial operations of government departments at both provincial and central levels. It oversees the collection and disbursement of funds, ensuring efficient financial management on behalf of the government.

Payment and Collection Services

The Bank of Italy provides vital payment and collection services for various governmental bodies. It processes payment orders issued by government departments and collects dues owed to the State from different sources, including banks, the Post Office, and tax collection offices.

Financial Reporting

The Bank of Italy’s treasury functions extend to the settlement of payments related to public debt. Additionally, it plays a crucial role in financial reporting by providing comprehensive financial data to government bodies and the State Audit Office. This transparency is crucial for ensuring effective fiscal oversight.

Final thoughts about Italy

Thank you for reading this article. You can continue to explore our articles about Italy in our Blog or access some other articles about Italian Education and Housing, how to start a Business and Statistics, Finance and Travel Business. If you need services related to Italian website content and SEO, company formations, nominee services, banking or payment processing services, please get in touch, and we will introduce you to our trusted partners.

External Support And Advice Links

If you are planning to start a business in Italy, here are some helpful resources for the process: