Italy’s central bank temporarily halted BFF Bank S.p.A.‘s dividend payouts and imposed other restrictions after a probe into the lending company’s credit exposures to state entities.
BFF Bank received a report in April from the Bank of Italy that raised concerns about the classification of its credit exposures in relation to the public administration, according to the company’s first-quarter earnings release. The probe, which ended in January, also flagged corporate and governance compensation practices.
Pending BFF Bank’s assessment, the central bank prevented the company from approving or implementing payouts on profits, variable remuneration and further expanding abroad by opening new branches or expanding into new markets. The temporary halt does not impact the interest payment on Tier 1 securities. BFF Bank said it will respond in July with its assessments.
The Borsa Italiana suspended trading on BFF Bank’s shares after they crashed shortly after the announcement. The Italian stock exchange will not accept market orders on the stocks starting May 10 and until further notice, according to an announcement on the stock exchange’s website.
BFF Bank’s government bond portfolio totaled €5 billion in the first quarter, a decrease from €5.6 billion a year ago. The company reported adjusted total revenues of €202.4 million as of March 31, of which €52.6 million came from its government bond portfolio.
Outside of Italy, BFF Bank operates in Croatia, the Czech Republic, Greece, Poland, France, Slovakia, Portugal and Spain.