Monti's Italian Job Bans Overlapping Executives In Rival Banks

Executives will no longer be able to hold simultaneous senior positions in rival Italian banks and financial institutions, according to a clause in the budget decree the Italian government passed last Sunday.

Article 36 of the decree cites the "protection of competition" for the rule, which forbids members of supervisory or management boards in one bank, insurer or company operating in the credit sector from holding similar roles in rival enterprises.

The measure is likely to force changes on the boards of large Italian banks including Mediobanca SpA (MB.MI).

The rule does not apply to banks or enterprises that are controlled by a larger shareholder, but rather to those where no such controlling ties exist, according to the budget decree document, which was released late Tuesday.

The new rule almost certainly will require Giovanni Bazoli, chairman of Intesa Sanpaolo SpA (ISP.MI), to resign his post on the board of rival UBI Banca SpA (UBI.MI).

The rule may also prompt changes at Mediobanca, on whose board sit senior executives from Unicredit SpA (UCG.MI) and Mediolanum spA (MED.MI), which are part of a shareholding alliance that owns 45% of the Milan-based merchant bank.

It has yet to be made clear whether holders of senior executive positions at Italian banks can still hold similar posts at insurers, a matter of relevance for Assicurazioni Generali SpA (G.MI).

The new rule approved by the new Italian government headed by former European antitrust chief Mario Monti comes at a time of renewed interest in competition rules.

Isvap, the insurance regulator, on Tuesday ruled that banks and insurers that sell home mortgages can no longer issue insurance policies on the products it issues.

Mortgage and loan insurance policies amounted to EUR2.4 billion in 2010 and often pose a "conflict of interest that penalize consumers," Isvap said.

-By Christopher Emsden, Dow Jones Newswires; 39 06 6976 6920; [e-mail]