Investing.com – BFF Bank (BIT:) collapsed on the stock market today after the Bank of Italy intervened harshly on the institution yesterday. In detail, Palazzo Koch temporarily suspended the distribution of profits, or other elements of assets by the bank, following an inspection on the management of public credits.
Furthermore, Bank of Italy has ordered that BFF refrain from paying the variable part of the remuneration and from further expanding operations abroad, through the opening of new branches or the expansion into new countries under the provision of services regime.
At the end of the morning, the stock lost more than 32% compared to the 10.96 euros per share at yesterday’s closing.
After the news and requests for clarification from shareholders, the bank issued a statement with some clarifications regarding the matter.
“On the occasion of the delivery of the inspection report and during the discussions with BFF, the Bank of Italy – despite the presence of compliance findings – expressed its conviction that the renewed corporate bodies, in their entirety, will be able to make an important contribution to the prompt resolution of the critical issues identified, and that the findings, based on the Bank’s historical experience, do not imply an increase in credit losses on the BFF Group’s portfolio, instead having as their object reporting profiles for prudential purposes”, we read in the Note.
“For its part, the Board of Directors confirmed its full trust in the CEO, Massimiliano Belingheri, and started a frank and constructive dialogue with the Supervisory Authority, in order to reach a prompt resolution of the findings. Bff’s current policy regarding dividends will be resumed after the revocation by the Bank of Italy of the temporary suspension of the payment of dividends”, is explained in the press release.
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During the inspections, Bff explains that it represented to the Bank of Italy an extreme scenario of classification of the credit portfolio as of 30 June 2023, based on the disapplication of mitigants used on that date, which were the subject of a compliance assessment.
In any case, BFF believes that the possible increase in RWAs and prudential calendar provisioning that could result from this interpretation will not lead to a substantial change in the bank’s economic-financial prospects, also taking into account the reserves not yet accounted for equal to 628 million euros) and the management actions that may be undertaken.
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