A regulatory crackdown by Bank of Italy targeted a niche lender that chases late payments from indebted public authorities, pushing the bank into crisis and leaving it vulnerable to opportunistic investors. As part of an intervention since 2024, the Bank of Italy forced Milan‑listed lender BFF to classify billions of euros in overdue payments from public authorities as troubled loans, requiring more capital to cover potential losses. The regulator hoped BFF could be broken up with its assets sold to local banks, removing the only major Italian institution that systematically pursues interest payments from late‑paying public authorities.
Shares in the bank, now operating under Bank of Italy supervision, are down more than 80% over the past year. The bank is exploring the sale of a stake to US‑based fund Cerberus, according to people familiar with the matter. BFF specializes in public administration factoring and pursues expensive late‑payment interest, required by EU law at a minimum of 8% plus the ECB reference rate. It initiates hundreds of lawsuits against Italian public authorities each year.
The stand‑off with the Bank of Italy centers on the valuation and recoverability of these interest claims, which can remain outstanding for years even when underlying invoices have been settled. BFF has successfully challenged the Italian state before the European Court of Human Rights multiple times over municipalities’ failure to comply with domestic court orders. Last year, Rome set aside more than €2bn to cover the risk of adverse court rulings in 2026. An internal BFF document dated April 2026 describes the Bank of Italy’s latest interpretation, particularly regarding late‑payment interest, as a departure from the supervisor’s earlier approach.
The bank could proceed with further writedowns of reclassified loans at a board meeting on Tuesday.
Source: Financial Times Companies · Summarized by HeadlinesBriefing