During 2020, initiatives to support innovation and growth, in line with European Union projects and objectives were promoted. Monitoring and advocacy activities before EU policy makers were conducted with the goal of actively contributing to debates related to the definition of regulations in the banking and financial space and in support of retail customers, with the ultimate goal of facilitating the role of Intesa Sanpaolo in relaunching the recovery of the real economy.
2020 was a year that saw an increase of the political pressure at European level for sustainability, that has been declared as a priority and a central issue by the von der Leyen Commission. In fact, the European Green Deal (EGD) was one of the first proposals adopted by the new Commission. An extensive review of the European legislation was launched on the basis of the commitments made by the EU within the EGD, which sets the goal for the EU of reaching the climate neutrality by 2050. Reviews of the current regulatory framework have begun in 2020 and are related to programs and financing instruments relevant for Intesa Sanpaolo. The Group had the opportunity to set out its points of views on aspects of the regulation that have a direct impact on its business activities to EU policy makers.
2020 has been disrupted by the Coronavirus pandemic, which elicited a serious reflection on the current development model, both in terms of environmental and social sustainability. The pandemic has warranted a massive re-evaluation of the European priorities, thus affecting policies that have a direct impact on Intesa Sanpaolo. The European Union responded to this symmetrical crisis by concluding a historic agreement on Next Generation EU (NGEU), which provides for the issuance of joint debt to address the economic and social crisis caused by the pandemic. 37% of the 750 billion euro of the programme will be earmarked to climate change. NGEU, together with a revised Multi-year Financial Framework Plan (MFF) has established the Recovery Plan, with a total endowment of over 1800 billion euros. Intesa Sanpaolo has paid attention to these important negotiations and represented its positions to the European institutions, in particular in relation to the opportunities related to existing and future financial instruments and the plan’s sections covering environmental and social sustainability.
In addition, advocacy and monitoring of the European Commission's initiatives included in the first Action Plan on Sustainable Finance continued during 2020, and the Group continued to be an active member of the European Banking Federation (EBF) and of the Association for Financial Markets in Europe (AFME) working groups on Sustainable Finance. The EBF working group was divided into subgroups and, within these, Intesa Sanpaolo contributed in particular to i) drafting a report on the best practices of European banks for the support and implementation of the United Nations Sustainable Developments Goals and ii) the discussions on the creation of a European Taxonomy for sustainability and on incentives (both demand and offer-side) for further developing the funding of sustainable investments.
Moreover, Intesa Sanpaolo monitored the European Commission's work on financing the circular economy, supporting its Circular economy team and promoting the Group's initiatives in this area.
With regards to banking digitalization, an ongoing coordination of internal and external working groups active on issues such as FinTech and innovative digital payments, Distributed Ledger Technology and Blockchain, cloud, cybersecurity, artificial intelligence, data economy, privacy, new digital assets (such as crypto-assets) was ensured. The aim was promoting a regulatory framework in line with the Group's position at European level, according to an approach aimed at encouraging innovation on one hand and consumer and investor protection on the other. On these issues, the collaboration with European trade associations has continued, with the participation of Intesa Sanpaolo experts in thematic working groups that have defined the positions of the industry on the main European initiatives in the digital field.
The Group is also following the legislative process of the European Commission's proposed regulation on DORA (Digital Operational Resilience Act), which is part of the broader "Digital Finance" package. DORA aims at making the financial sector more resilient to cyber risks. The Group is continuing to play its role in the Public-Private Partnership on Cybersecurity, supported by the European Commission, through its membership in ECSO (European Cyber Security Organisation) to develop innovative European cybersecurity solutions.
The Bank is participating in a European project that has received funding to develop a "common application" for the harmonization of cyber incident reporting.
In relation to blockchain, the Group has become a member of INATBA – the International Association for Trusted Blockchain Applications - which offers DLT developers and users a global discussion forum to interact with regulators and policy makers and take blockchain technology "to the next level."
On cloud, the Group continues to oversee the activities of the Cloud Banking Forum, organized by the European Banking Federation, whose role is to facilitate the dialogue between relevant authorities, cloud services providers (CSPs) and banks with the aim of promoting a harmonized supervisory approach in relation to cloud computing and of supporting the rapid adoption of public/hybrid cloud solutions in the banking space.
The Group has also adhered to AI4People a new multi-stakeholders forum dealing with Artificial Intelligence, whose aim is to create a public room where outlining the founding principles, policies and practices on which a “good AI for society” can be built. In this regard, the Group has entered into a research collaboration with a technology partner and a university to develop and test AI solutions in banking that are shaped by the ethical use of data.
From the point of view of banking regulation and prudential requirements, during 2020 the following legislative activities were tracked i) the review of the capital requirements and management of banking crises regulatory frameworks, ii) the completion of the Banking Union iii) the reduction of systemic risk.
In particular, also from the prudential point of view, the bank has positioned itself by supporting proposals aimed at promoting green investments, infrastructural projects aimed at supporting the economy (e.g. factoring, trade finance), software investments.
With reference to prudential requirements, the Bank is actively working both with ABI and with EU trade associations on possible support factors for ESG assets. Moreover, in order to relaunch the securitization market (the EU Commission is expected to start work on revising the legislative framework on securitization in the coming months), the Group is also working with the trade associations on the possible definition of sustainable securitizations.
During 2020, EU legislators put forward targeted legislative proposals (so-called quick-fix) to tackle the effects of the pandemic. Legislative packages were approved both in the prudential space (Capital Requirements Regulation) and in the financial markets one (Prospectus Regulation, Mifid, Securitisation) precisely to facilitate banks in making resources available for the recovery of the economy.
The Bank also monitored the European Commission's new Action Plan on Non-Performing Loans and in particular the regulatory proposals regarding the directive on the creation of a secondary market for NPLs (credit servicers, credit purchasers). The appropriate calibration of these measures will enable the development of a sounder banking system, with a further protection of businesses and savers at EU level.
In addition to the above mentioned area the following has been monitored and discussed with policy makers: i) the regulatory initiatives falling within the scope of the new EU Action Plan on the Capital Markets Union (CMU), ii) the revision of the EU Financial Benchmarks Regulation, iii) the Brexit negotiations and the related contingency measures adopted by the European institutions.
The Group functions involved are kept constantly updated through periodic newsletters concerning European policies for growth, innovation, support to businesses, digital policies and those relating to banking and financial market regulations. Targeted updates (so-called EU Regulatory Alerts) are also sent, in the presence of significant news related to regulations that require particularly attention due to the impact they may have on the Group's strategy and activities and, depending on the priority indicated, require the definition of the Group's position to be presented to the European institutions and other stakeholders.
In order to make the activities of the internal working groups more effective, support and training are provided to Group Departments and Services, in particular through seminars aimed not only at presenting the peculiarities of the European legislative process and the possibility for the Group to influence its final decisions, but also at illustrating the status of the art of the most relevant incoming regulations.
Since the SSM (Single Supervisory Mechanism) was launched at the end of 2014, the Department maintains an ongoing relationship with the Single European Supervisor, coordinating the Group's annual supervision plan, aiming to ensure due consistency and uniformity in interaction processes with the supervisor and to promote a widespread culture of "supervisory awareness" to increasingly strengthen the capacity to respond to Supervisor's requests.