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Economy and Banking Sector of Italy

Italy
Location
Southcentral Europe
Population  (2016)
60 665 551  (0.00%)
EU Status
member since 1952
Currency
EUR (Euro)
Nominal GDP (2016)
1 672.4 bln EUR  (+0.02%)
Credit Ratings (as of Sep 2016)
BBB+/Baa2
Consolidated Banking Assets (2015)
2 723.19 bln EUR  (+0.82%)
Deposit Guarantee
100 000 EUR
Number of Banks
590

Italy is a parliamentary republic in Southern Europe and a founding member of the European Union.

After World War II, Italy rapidly transformed from an agriculture based economy into one of the world's most industrialised nations. Machinery, textiles (including closing), industrial design, furniture production, agri-alimentary are important sectors of Italian economy that contribute significantly to the country’s export. Tourism is also one of Italy's most significant economic sectors accounting for about 4% of Italy’s GDP. However, Italy has several problems which slow down the economic growth, including organized crime, corruption, and economic disbalance between southern and northern Italy.

A business model of Italian banking is focused on loans intermediation and other retail services and very limited exposure to market risk. This traditional banking approach has helped the Italian banks in supporting domestic activities.

List of Banks in Italy

National Currency

Euro (EUR)

Italy joined the Euro Area on 1 January 1999.

GDP

Nominal GDP (2016)Nominal GDP per Capita (2016)Real GDP Growth (2016)
1 672.4 bln EUR  (+0.02%)27 600 EUR  (+0.03%)0.9 %  (2015: 0.8 %)

According to Eurostat, nominal GDP of Italy in 2016 was 1 672.4 bln EUR.

Italy underperforms the European Union in terms of real GDP growth with the average annual differential coming to -0.9% over the past 10 years (2006 - 2016). In 2016 real GDP growth was 0.9% which was below the Euro Area average (1.8%) and below the European Union average (1.9%). Real GDP growth in 2017 - 2022 are IMF's estimates.

Real GDP Growth in Italy. Chart 1. Real GDP Growth in Italy. Source: Eurostat, International Monetary Fund.

In 2016, nominal GDP per capita in Italy was 27 600 EUR.

Italy has an above-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, exceeded that of the European Union by 0.9% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2022 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Italy; European Union = 100. Chart 2. GDP Per Capita at Purchasing Power Parity in Italy; European Union = 100.

Inflation Rate

CPI, MoM (Mar 2017)CPI, YoY (Apr 2017)CPI, Year Average (2016)
1.9 %  (Feb 2017: 0.2 %)2.0 %  (Mar 2017: 1.4 %)-0.1 %  (2015: 0.1 %)

According to Eurostat, inflation rate in Italy in 2016 expressed as annual percentages of average consumer prices was -0.1% which was below the Euro Area average (0.2%) and below the European Union average (0.3%). Inflation rates in 2017 - 2022 are IMF's estimates.

Inflation Rate in Italy. Chart 3. Inflation Rate in Italy. Source: Eurostat, International Monetary Fund.

Unemployment Rate

Unemployment Rate (2016)
11.7 %  (2015: 11.9 %)

Government Bond Yield

Government Bond Yield (Mar 2017)
2.40 %  (Feb 2017: 2.35 %)
According to Eurostat, government bond yield in Italy in Mar 2017 was 2.40%, compared to 2.35% in Feb 2017.
Government bond yield of Italy. Chart 4. Government bond yield of Italy. Source: Eurostat.

Credit Ratings (as of Sep 2016)

Fitch Moody's
BBB+ (good credit quality), outlook stable Baa2 (lower medium grade), outlook stable

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding Tax Rates in Italy: 0.0 - 20.0%

Withholding tax rates applied on payments of interest and dividends in Italy are shown in Table 1.

Dividends Interest
Natural person, resident 20.0 %20.0 %
Natural person, non-resident 20.0 %0.0 %
Table 1. Withholding tax rates in Italy.

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

DTAs of Italy: 103 Signed Agreements

Italy signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Albania
 Algeria
 Argentina
 Armenia
 Australia
 Austria
 Azerbaijan
 Bangladesh
 Belarus
 Belgium
 Bosnia and Herzegovina
 Brazil
 Bulgaria
 Canada
 China
 Cote D'Ivoire
 Croatia
 Cyprus
 Czech Republic
 Denmark
 Ecuador
 Egypt
 Estonia
 Ethiopia
 Finland
 France
 Georgia
 Germany
 Ghana
 Greece
 Hungary
 Iceland
 India
 Indonesia
 Ireland
 Israel
 Japan
 Jordan
 Kazakhstan
 Korea, Republic of
 Kuwait
 Kyrgyzstan
 Latvia
 Lebanon
 Lithuania
 Luxembourg
 Macedonia
 Malaysia
 Malta
 Mauritius
 Mexico
 Moldova, Republic of
 Montenegro
 Morocco
 Mozambique
 Netherlands
 New Zealand
 Norway
 Oman
 Pakistan
 Philippines
 Poland
 Portugal
 Qatar
 Romania
 Russian Federation
 San Marino (Oct 2013)
 Saudi Arabia
 Senegal
 Serbia
 Singapore
 Slovakia
 Slovenia
 South Africa
 Spain
 Sri Lanka
 Sweden
 Switzerland
 Syrian Arab Republic
 Tajikistan
 Tanzania, United Republic of
 Thailand
 Trinidad and Tobago
 Tunisia
 Turkey
 Turkmenistan
 Uganda
 Ukraine
 United Arab Emirates
 United Kingdom
 United States
 Uzbekistan
 Venezuela
 Vietnam
 Zambia

There are also several agreements between Italy and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Cuba
 Gabon
 Hong Kong (Jan 2013)
 Iran, Islamic Republic of
 Kenya
 Libya
 Mongolia
 Panama

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Exchange on Request: 7 Signed Agreements

There are also several agreements between Italy and other jurisdictions which was signed but haven't yet come into force (for agreements signed after 01 January 2013 of signing the agreement is given in brackets):

 Bermuda
 Cayman Islands
 Cook Islands
 Gibraltar
 Guernsey
 Isle of Man (Sep 2013)
 Jersey

Automatic Exchange: Starts in September 2017

Italy signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information

FATCA

Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

FATCA Status in Italy
IGA in effect since 10 January 2014, Model 1

Italy has FATCA agreement with the U.S. in effect since 10 January 2014 (Intergovernmental Agreement Model 1). Financial institutions operating in Italy are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Italian financial accounts hold in U.S. financial institutions will be reported to Italian authorities.

Further Information

Financial Market Development

Financial Market Development
3.1 (max 7.0), 122nd out of 138 countries
Banks' Soundness
4.2 (max 7.0), 106th out of 138 countries

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Italy is scored 3.1 out of maximum 7.0 and ranked 122nd out of 138 analysed economies. Soundness of banks is scored 4.2 bringing Italy into the 106th place, trustworthiness and confidence of financial market is scored 3.2 (125th place).

Financial Market Development in Italy. Chart 5. Financial Market Development in Italy. Source: WEF.

Deposit Guarantee Scheme

Maximum Protected Amount
100 000 EUR

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Italy are summarised in Table 2.

Scheme Participantsall credit institutions operating in Italy, branches of non-EU banks, branches of Italian banks abroad
Scheme Exemptionsbranches of EU-banks (covered by their home countries)
Covered Accountsrepayable funds acquired by banks in the form of deposits or other forms and to bankers' drafts or other similar credit instruments shall be eligible for payment
Maximum Protected Amount100 000 EUR
Paid In CurrencyEUR

Table 2. Deposit guarantee scheme in Italy.

Further Information

Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local Currency (Euro) Foreign Currency
Aa2 (high grade) Aa2 (high grade)

Local currency (Euro) deposit ceiling for Italy is set to Aa2 (high grade), foreign currency deposit ceiling is Aa2 (high grade).

Deposit Rates

Average Deposit Rate (Feb 2017, EUR)
0.94 %  (Jan 2017: 0.83 %)
In Feb 2017, an agreed annualised deposit rate in local currency (Euro) of new contracts with agreed maturity up to 1 year between credit institutions and households was 0.94% which was above the Euro Area average (0.43%).
Deposit Rates in Italy. Chart 6. Deposit Rates in Italy. Source: ECB.

Further Information

Banking Sector Structure

Number of Banks
590
Consolidated Assets (2015)
2 723.19 bln EUR  (+0.82%)
Recent Changes (2016)
new banks: 14, closed banks: 57

Currently there are 590 credit institutions operating in Italy.

In 2015 consolidated banking assets in Italy were 2 723.19 bln EUR. The consolidated banking assets' evolution is shown at Chart 7 below.

Consolidated banking assets in Italy. Chart 7. Consolidated banking assets in Italy.

Recent structural changes (2013 - 2016) of the banking sector of Italy are summarised in Table 3.

2013201420152016
Number of Opened Banks581814
Number of Closed Banks19293257

Table 3. Recent structural changes in the banking sector of Italy.

The list of the most recently opened banks in Italy is provided in Table 4.

All the credit institutions operating in Italy can be classified into several categories. Table 5 summarises the number of banks in each category.

CategoryNumber of Banks
Banks163
Branches of foreign banks83
Central banks1
Cooperative banks315
Savings banks28

Table 5. Number of banks by category in Italy.

There are 83 branches of foreign banks from 16 different countries in Italy. Table 6 shows 10 countries having the biggest number of branches in Italy.

Country of OriginNumber of Branches
 France20
 United Kingdom16
 Germany13
 Luxembourg9
 Netherlands5
 Spain4
 Austria4
 United States2
 Japan2
 Ireland2

Table 6. Number of branches of foreign banks in Italy grouped by country of origin.

Current Accounts

Minimal Annual Costs
0.00 EUR
Maximum Annual Costs
69.60 EUR
17 offers from 13 banks

Savings Accounts

Minimal Interest Rate
0.04 %
Maximum Interest Rate
1.61 %
70 offers from 13 banks

Time Deposit Accounts

Minimal Interest Rate
0.25 %
Maximum Interest Rate
2.40 %
23 offers from 7 banks

Credit Cards

Minimal Annual Costs
24.00 EUR
Maximum Annual Costs
100.00 EUR
6 offers from 3 banks

Consumer Loans

Minimal Effective Rate
8.48 %
Maximum Effective Rate
9.11 %
2 offers from 2 banks

Car Loans

Minimal Effective Rate
9.11 %
Maximum Effective Rate
9.11 %
1 offers from 1 banks