ITALY , Financial market , banks , insurance , mutual fund , pension fund managerial incentive

1. Can You guess the country ?

2. The country which
known for their music
such as the piano and
opera (very popular)
and sometimes they’re
known for there
amazing art such as the
one above.

4. Financial Institutions and Market
(ITALY)
Presented By :
Anuj Goyal
Shyam Nayma

5. Economy of Italy
Rank 8th (nominal) / 10th (PPP)
Currency Euro (EUR), except in Campione d'Italia(CHF)
Trade organisations EU, WTO (via EU membership) and OECD
GDP $2.198 trillion (2011) (nominal; 8th )
$1.846 trillion (2011) (PPP; 10th )
GDP growth -0.8 (2012-First quarter)[
GDP per capita $36,267 (2011) (nominal; 21st )
$30,464 (2011) (PPP; 27th )
GDP by sector agriculture: 1.8%; industries: 24.9%; services: 73.3%
Inflation (CPI) 1.4%
Labour force 25.05 million
Labour force services (65.1%), industry (30.7%), agriculture (4.2%) (2005)
by occupation
Unemployment 10.7% (July 2012)
Average gross salary 2,521 € / 3,403 $, monthly (2006)
Main industries tourism, communications, machinery,steel, chemicals, pharmaceuticals,f
ood processing, textiles, motor vehicles, home
appliances, clothing,fashion

6. Functions of Financial Market
 Transfer of resources across time and space
 Allocation of risk
 Economics of pooling
 Payment system
 Managerial incentives
 Regulators/financial decision making

7. Transfer of resources
across time and space

8. Types of Banks
 Central bank – Banca d'Italia
 Part of the ESCB
Headquarters ROME
Established 1893
Governor Ignazio Visco
Central bank of Italy
Preceded by Bankitalia
Succeeded by European
Central
Bank(1999)

9. Central bank – Functions
 After the charge of monetary and exchange rate policies was shifted
in 1998 to the European Central Bank, within the European
institutional framework, the bank implements the decisions,
issues euro banknotes and withdraws and destroys worn pieces.
 banking and financial supervision
 market supervision
 oversight of the payment system and provision of settlement
services
 State treasury service
 economic analysis and institutional consultancy.

10. Banking Sector structure

11. Ownership

12. Banks
The top largest banks of Italy include UBI Banca, UniCredito
Italiano, BPU Group,Banco Popolare, among others.
 Italy's top three banks have a combined market capitalisation
of around 56 billion euros
34 of 37 banks are downgrade by S&P

13. Types of pension funds in Italy
New legislation provides for two types of pension funds
1 Occupational pension funds (2nd pillar)
 Typically set up by collective bargaining at industry level some are very large funds:
 COMETA (steel industry, has over 330.000 members);
 FONCHIM ( chemical industry, has over 100.000 members)
2 Open-ended pension funds (2nd/3rd pillar)
 set up by banks, insurance companies, asset management firms
 legal structure similar to that of mutual funds (legal separation of assets, but
no independent legal status)
 Mainly addressed to self-employed

14. Eligibility requirement
Worker registered under public retirement system can be divided in to two
category
1. Employees
2. Self employed
Old age pension
Earning based method : Men 65 , woman 60 and both have minimum tenure of 20 years to access
fund
Contribution based : accession required 5 years of contribution in addition to 65 years for man and
60 year for woman
Seniority pension : benefit are paid at yonger age than old pension scheme .
 95years = 60 years + 35 tenure

15. Pension funds in Italy main figures (end-2011)
Number of Members Assets
funds ( bn € )
Occupational Pension Funds 42 880,000 1.2
of which:
fully operative 5 490,000 1.0
Open Pension Funds 99
of which:
fully operative 70 220,000 0.5
“Old” Pension Funds 577 680,000 28.5
Total 718 1,800,000 30.2
Members as % of workforce
( 21m ) 8.5 %
Assets as % of households’
Financial assets 1.2 %
( 2,600 bn € )
Assets as % of GDP
( 1,150 bn € ) 2.6 %

16. Stock Exchange-Borsa Italiana
based in Milan, is Italy's main stock
exchange.
 It was privatised in 1997 and is a part
of the London Stock Exchange Group
plc since 2007.
 In 2005, the companies listed on the
Borsa were worth US$890 billion.
 It is also informally known as Piazza
Affari("Business Square"), after the city
square of Milan where its headquarters
(the Palazzo Mezzanotte building) is
located.

17. Structure
The Italian Stock Exchange (Borsa Italiana) indexes
approximately 270 listed stocks within five different market
sectors:
MTA/MTAX and Mercato Expandi
Derivatives (IDEM)
Covered Warrants and Certificates (SeDeX)
Government Bonds and Securities (MOT)
Exchange-Traded Funds and Index Open-end Funds (MTF)

18. Mutual Funds
Italy's mutual-fund market is the second-biggest in continental
Europe, after France.
Classification :Two classifications are used in Italy:
 the Bank of Italy's classification (bond funds, balanced funds and equity funds)
 classification used by Assogestioni (the Italian mutual funds association)
(20 different categories and distinguishes between Italian and international funds )

19. Funds’ Fee and expenses
The Capital Gain Tax : income received from mutual funds is tax
exempt for household

20. Risk Allocation

21. Insurance Sector
Overview
 According to a recent report of ANIA (the Italian Insurance
Company Association), the overall result of the industry in the first
half of 2011 has improved over the first six months of 2010, but was
lower than that recorded in the first six months of 2009.
 In the second part of 2012 the prospects on the profitability of the
sector might get worse due to the tension in the euro area of the
financial markets, especially in the areas of sovereign bonds
 Concerning the non-life insurance sector, ISVAP (the Italian
Insurance Authority) reported for the first nine months of 2011 an
increase of 2.8% in premium, with respect to the same 2010 period.

22. Top Italian insurance players

23. Asset Allocation of Pension and Insurance

24. The payment system can be defined as the set of
instruments, procedures and entities (both
intermediaries and other), infrastructures and
rules that contribute to the transfer of money from
one operator to another

25. Payment System entity involved
The banking system,
The Italian Post Office and
The Bank of Italy

26. Italian State Treasury Service:
Traditional Payment Processes
Individuals/
State Administrations
State Administrations
Corporations
State Audit Office
Control on
administrative
regularity Post Offices
State Accounting
Offices Cash Payments
Internal Control
Reporting Banks
Reporting
State General State
Accounting Office Clearing and
Treasury Service
Monitors the
settlement
Expenditure Level (Bank of Italy)
System
Payment flows
Information flows

27. Driving forces of the reform of public payments in Italy
REFORM OF PUBLIC FEDERALISM
ADMINISTRATION Improving information
- Customer satisfaction on public accounts
- Cost efficiency of PA
- Competitiveness of Italian
economy
REFORM OF
PUBLIC PAYMENTS
PROMOTION OF PAYMENT
SYSTEMS EFFICIENCY

28. Post Office
 Law 71/1994 has gradually changed the legal status of the Post Office, which,
since February 1998, has been a private company owned by the Ministry of the
Treasury.
 growing rapidly so as to compete with the banking system
 In March 2012 post offices numbered almost 13308.
 in 1999 the Italian Post Office completed the process of involvement in the
interbank procedures for the exchange and settlement of bank and postal
cheques.
 Furthermore, the Bank of Italy fostered the involvement of the Post Office in
the low-value credit transfer procedure (in April 2000).
 In July 2002 a new agreement for mutual acceptance of cheques.

29. “BI-Rel” & “BI-Comp”
“BI-Rel”, for the settlement in real time of large individual
transactions,
“BI-Comp”, for the clearing and settlement of retail
payments.

30. Payment and Settlement Services for
the Italian Marketplace
CLEARING AND SETTLEMENT SYSTEMS
Electronic orders of payment
Electronic collection of tax and contribution
Payments on behalf of the State BI - COMP
and other administrations Multilateral balances
PAPER BASED TRANSACTIONS
LOW-VALUE DOMESTIC PAYMENTS
EXPRESS
SECURITIES TRANSACTIONS Securities
Multilateral cash
balances
NON EURO AREA CORRESPONDENT TRANSACTIONS BI-REL
LARGE VALUE AND CROSS BORDER PAYMENTS
DERIVATIVES
(Settlement accounts
at the Bank of Italy)

31. Monte Titoli
Monte Titoli is a company which provides central custody
and administration of transferable securities (shares and
bonds)
Since 1986 the CSD’s activities in private securities have
been regulated by a specific law, making Monte Titoli the
only company authorised to administer private securities.
In August 2000 Monte Titoli was authorised to manage
government bonds, which until then had been managed by
the Bank of Italy; the actual transfer of government securities
from the Bank of Italy to Monte Titoli took place at the end
of 2000. Therefore, there is now one single CSD that
manages both private and government securities.

33. Interbank register of bad cheques and
payment cards
 Legislative Decree n° 507 of 30 December 1999, implementing
Law n° 205 of 25 June 1999, reformed the system of penalties
for the issuing of unauthorised or uncovered bank and postal
cheques
 hese new rules have provided for the setting up at the Bank of
Italy of a computerised archive of bank and postal cheques and
payment cards (called Centrale di Allarme Interbancaria – CAI)

36. CORRESPONDENT SERVICES
The Euro’s performance within a context of increasingly
integrated financial markets has led the Bank of Italy to
strengthen its correspondent banking services by introducing
technological and functional innovations concerning both
payment management and securities.
At the same time, these services have come to be used by a
wider range of clients, including Public Administration, the
central banks of countries outside of the euro area and
supranational bodies.
The Bank of Italy has decided to offer the entire range of
services in a “modular” configuration, allowing clients to
choose the types of services they wish to use.

37. SIBOS
SIBOS is an annual conference on payment systems organised
by SWIFT, in which banks, financial operators and service
providers from all countries participate. In 2006, this event
was held in Sydney in the week from 9 to 13 October 2006.
As is customary, the Bank of Italy together with 4 other
national central banks and the European Central Bank
participated in a shared Euro system stand.
The conference offered the possibility to illustrate to
operators the Euro system’s functions and its main activities
in the field of payment systems, with particular reference to
the TARGET2 project (1) and to the more recent
TARGET2-securitiesinitiative (2).

38. Managerial incentives
PARMALAT meltdown : biggest failure of Italy
( European history )
Founder(s) :Calisto Tanzi ( 22 years college drop
out )
Financial Fraud
Bankruptcy : December 24 , 2003

39. BANK OF ITALY REGULATIONS
 Bank of Italy regulation consists of circulars, regulations and
supervisory measures. Of a basically technical nature these
provisions lay down rules and methods for categories of banking
and financial intermediaries, operating both individually and in
groups.
 Under Law 262/2005 on the protection of savings, the Bank of
Italy must carry out advance analysis of the impact of the
measures that it intends to issue, assess their effects, in terms of
costs and benefits, on the interested parties, and carry out a public
consultation. The reasons for regulatory measures must be given
and the measures themselves revised periodically

40. European Banking Authority
(EBA)
 The EBA has officially come into being as of 1 January 2011
and has taken over all existing and ongoing tasks and
responsibilities from the Committee of European Banking
Supervisors (CEBS).
 The EBA has some quite broad competences, including
preventing regulatory arbitrage, guaranteeing a level playing
field, strengthening international supervisory coordination,
promoting supervisory convergence and providing advice to the
EU institutions in the areas of banking, payments and e-money
regulation as well as on issues related to corporate governance,
auditing and financial reporting.

41. CONSOB
 transparency and correct behaviour by securities market
participants;
 disclosure of complete and accurate information to the
investing public by listed companies;
 accuracy of the facts represented in the prospectuses related to
offerings of transferable securities to the investing public;
 compliance with regulations by auditors entered in the Special
Register

42. Thanks !!!