Shares in Italy coop banks up after reform bill

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Shares in Banca Popolare Milano were up 1.84 percent on Wednesday morning. Photo: Giuseppe Cacace/AFP
12:58 CET+01:00
Shares in Italy's cooperative banks rose strongly on Wednesday after Prime Minister Matteo Renzi's government approved a decree that will force the largest among them to become joint stock companies.

Shares in Banca Popolare Emilia Romagna were up 5.39 percent at 11.00am, while Banco Popolare was up 4.55 percent and Banca Popolare Milano was up 1.84 percent.

Renzi battled off political opposition late on Tuesday to draft the emergency decree aimed at strengthening the banking sector by changing shareholder voting rules at Italy's mid-sized "popolari" banks.

Shareholders in the lenders are currently awarded one vote regardless of how many shares they own, but critics say this has given local banking unions - often entwined with local communities and politics - too much control over strategy.

The prime minister said the ten largest lenders would be affected and they would have 18 months to comply with the new rules, which were being brought in because "our banking system is solid, healthy and serious, but it needs elements of innovation."

In a nod to the customer, the reform also aims to ease the process of transferring current accounts and take some of the sting out of the hefty fees.

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Parliament has 60 days to approve the decree, during which time Renzi will need to win over sceptics within his small coalition ally, the NDC party, including Deputy Prime Minister Angelino Alfano.

The anti-establishment Five Star Movement (M5S) has also slammed the decree, saying medium-sized banks were under attack: "With an unprecedented blitz, Renzi is getting ready to sell off the strongboxes of Italian savings to high finance."

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