BFF ordered by central bank to halt dividends, bonuses over loan classing

BFF Bank SpA

09/05/2024 14:23

MILAN, May 9 (Reuters) - Italy's BFF Bank  BFF.MI  said
on Thursday it had been instructed by the Bank of Italy to
suspend dividend and bonus payments due to issues about the way
it was classifying credits towards the state.
    Active in nine countries, BFF specialises in buying credits
that companies have towards the public administration and the
national health service. It expanded into depositary services
following a 2021 merger with DEPObank.
    In reporting first quarter earnings, BFF said it had
received on April 29 the outcome of an inspection the Bank of
Italy had carried out up until January.
    The central bank told BFF the way it classified state
credits was not consistent with the European Banking Authority's
guidelines on how to apply the definition of default. Its
concerns centred in particular on how the lender was calculating
delayed payments. 
    Shares in BFF were automatically halted from trading after
falling 10.3%. By 1252 GMT they were indicated down 32%.
    BFF said it would have to illustrate to the Bank of Italy in
July how it had addressed its observations.
    In the meantime, it will not be able to pay out any profits
and will have to withhold bonus payments and freeze any foreign
expansion in terms of new branch openings or offering its
services in new markets.
    BFF said it could have to book provisions after changing the
classification of the credits as suggested by the central bank
and its risk-weighted assets could increase.
    However it added that it did not expect this to
"substantially" affect its economic and financial prospects.    

 (Reporting by Valentina Za, editing by Gavin Jones)
 ((valentina.za@thomsonreuters.com; +39 02 6612 9526;))