Italy co-opts its co-ops

Dominic O’Neill
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After years of crisis, a quiet revolution is happening in Italian banking. A mountain of bad debt and a government and regulator intent on reform have ended a fundamental tenet of the cooperative system – with implications for the vast tracts of cooperative banking elsewhere in Europe. Will the reform and a wave of mergers succeed in bringing Italian capitalism out of the regions and into the 21st century?

Few banks hold their heritage and locality as dear as those in Italy, perhaps none more so than the cooperative, or popolari banks. Many popolari remain based in small but ancient cities, with their own cuisine, monuments and heroes of the past. Even their offices tend to be full of paintings and sculptures, many dating back hundreds of years.

So it is ironic that at a time when the oldest popolari banks are celebrating 150 years of existence, some will be cut loose from their origins and identity – depriving their hometowns of a last vestige of independence.

Once prime minister Matteo Renzi had pushed his investment compact through parliament in the spring of this year, the 10 biggest popolari banks faced the choice of either shrinking or doing away with a fundamental principle of cooperative banking – that all shareholders only have one vote, regardless of how much they own.