The Bank of Italy has ordered the temporary suspension of the distribution of profits, or other elements of assets, by Bff Banking Group after the outcome of the inspection conducted on the institution regarding its management of public loans.

Specifically, reads Bff's note on the quarterly report, the supervision found that the institution's current classification of public loans is not related to the "representation of a related credit risk."

Bff, in fact, applied a different interpretation of Eba guidelines on the definition of default, particularly with regard to the application of suspension to the calculation of days in arrears.

The BoI also formulated findings on the bank's governance and corporate practices regarding remuneration, with particular reference to some contractual provisions referable to the CEO.

In addition to the temporary suspension on the distribution of profits generated from fiscal year 2024, the supervision also ordered Bff to refrain from paying the variable part of remuneration and from further expansion of operations abroad through the opening of new branches or expansion into new countries under the provision of services.

According to Bff, based on preliminary assessments, the possible increase in Rwa and prudential accruals that might result does not result in a substantial change in the bank's economic and financial outlook.

In the Italian Stock Exchange, Bff's stock is down sharply after the announcement of the measures taken by the Bank of Italy, and as of 2:25 p.m. it is on the volatility auction, down 10.3 percent.

(Andrea Mandalà, editing Sabina Suzzi)