SUPERNEWS

Equities

BFF Bank Falls 10%, Dividends Halted by Italy's Bank Probe

BFF Bank's stock plunges after Bank of Italy halts dividends, citing concerns over credit practices and governance.

By Max Weldon

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5/9, 11:29 EDT
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Key Takeaway

  • BFF Bank SpA's stock plummeted following the Bank of Italy's dividend suspension and concerns over credit exposure, governance, and compensation.
  • Shares fell 10% and notes due in March 2029 dropped 1.7 cents on the euro, marking significant financial market reactions.
  • Despite regulatory scrutiny, BFF Bank does not anticipate a material impact on its economic outlook or dividend policy.

Regulatory Scrutiny

BFF Bank SpA experienced a significant drop in its stock value, marking its most substantial decline in two years, following the Bank of Italy's decision to impose a temporary prohibition on "profit distribution" and international expansion. This decision came in the wake of an inspection by the Bank of Italy, which raised concerns regarding BFF Bank's credit exposure classification towards state bodies, governance, and corporate compensation practices. The central bank's requests were communicated to BFF on April 29, as per the bank's announcement.

Financial Impact

Following the regulatory announcement, BFF Bank's shares witnessed a sharp decline, falling as much as 10% before trading was suspended. This marked the largest intraday decrease since April 2022. Additionally, BFF Bank's notes due in March 2029 experienced a decrease in value, dropping 1.7 cents on the euro to 98.2 cents, according to Bloomberg's compiled data. Despite these financial market reactions, BFF Bank clarified that the restrictions on profit distribution do not extend to the payment of interest on additional Tier 1 securities.

Bank's Response and Outlook

BFF Bank, specializing in the management and acquisition of public-sector debt, as well as offering factoring, securities services, and corporate payments across multiple European countries, responded to the regulatory scrutiny with a statement. The bank's board indicated that the potential increase in risk-weighted assets and prudential calendar provisioning prompted by the Bank of Italy's inspection is not expected to materially alter the bank's economic and financial outlook. Furthermore, BFF Bank's CEO, Massimiliano Belingheri, reassured investors during a conference call with analysts that the ongoing probe would not necessitate a change in the bank's dividend policy or affect its profitability.

Management Quotes

  • Massimiliano Belingheri, CEO of BFF Bank:

    "The bank doesn’t see a change in its dividend policy nor in its profitability due to the probe."