Italy Passes Law Turning Co-op Banks Into Joint-Stock Companies

Italy’s Parliament approved legislation to convert the country’s 10 largest cooperative banks into joint-stock companies within 18 months as it seeks to improve governance and boost lending.

The Senate on Tuesday gave final approval to a decree passed by the government in January that requires banks with assets of more than 8 billion euros ($8.7 billion) to change the rules under which they operate.

The most sweeping Italian banking legislation in more than two decades is expected to make lenders more attractive to investors and pave the way for takeovers and mergers. The banks in question, known as popolari, have been criticized by regulators and some shareholders for their governance, which has concentrated power with employees, unions and local investors rather than larger backers.

The law includes a two-year transitional period during which the popolari banks may impose a cap on voting rights at 5 percent, regardless of how many shares are held.

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