BANK OF ITALY SETS MERCHANT BANK CAPITAL MINIMUM
A Bank of Italy circular that gives the
green light for Italian banks to establish merchant banking
units stipulates that such units must have a minimum capital of
50 billion lire.
    The circular, which renders operative a previously detailed
resolution agreed by a government interministerial committee
last month, will open the door for wider participation by
Italian banks in merchant banking activities.
    Previously, such activities were essentially confined to
state banks operating special credit sections to provide
medium- and long-term loans to industry.
    The circular also stipulates that merchant banks set up by
banks can have debts totaling a maximum of double their
capital.
    It also stipulates that the total amount of risk capital
that a merchant bank can hold in its portfolio must not exceed
the value of the bank's own combined capital and reserves.
    No investment in any single company must exceed 20 pct of
the combined value of the merchant bank's capital and reserves.
    The merchant banks may not acquire, either directly or
indirectly, controlling stakes in companies in which they
invest.
 Reuter
