On last December 2019, Banca Popolare di Bari (BPB) fell in the extraordinary administration procedure as a consequence of the significant losses recorded in 2018 and the relevant drop of the capital ratios below the regulatory thresholds. In other words, it is the collapse of the main grassroots bank set up in the Apulia Region (i.e. in the South of Italy), in the middle of the XIXth century. The social and economic fabric, made up mostly of small enterprises, artisans and savers, witnessed to a gradual worsening of the most relevant player for the local development. The rationale of the BPB’s collapse resides in a combined mix of causes, such as the inconsistent business strategy, the corporate governance path, the delay of the institutional context and the audit failures. First of all, the top management team and the Board of Directors (BoD) opted for some merger & acquistion operations, in order to enlarge the presence in other local communities (i.e. Abruzzo and Calabria regions). In so doing, BPB slowly lost its core identity of grassroots bank and, at the same time, it had not a fitting endowment of resources to compete against the key players in the national market (i.e. UniCredit Group, Intesa San Paolo, etc.). The corporate governance rests on a top management team comparable to a family business, given that just a family had the real power to decide on the bank development and growth policies. Such power, in an indirect way, persisted albeit the removal action of the CEO exerted by the Bank of Italy (i.e. the so called watch dog of Italian banking industry), in 2017. Unlike family business, it is however, necessary to point out that the ownership structure is significantly “pulverised” among a great number of shareholders. In the Italian banking market, the institutional context marked out by a relevant delay in recommending the transformation of cooperative bank in a limited company so as to promoting an effective entrepreneurship path among regulated players too. At last, the audit failures pertain some estimations regarding both the BPB’s going concern attitude and the audit of specific scopes, such as the goodwill, the creditworthiness assessment and the resulting quality of credits recorded in the financial statements. In addition, it is worthwhile to put in evidence that there was no discontinuity in the external auditors, as the Chair of the Board of Statutory Auditors derived from the PWC, the BPB’s independent auditor during the last three years before the collapse.
Doni, F., Corvino, A., Bianchi Martini, S. (2021). The crack of Banca Popolare di Bari: from inefficiencies in accounting and auditing to the bailout of the Italian government. The crisis of mutual banks in Italy. In Big Four, Big Fail. Two workshops on the international dimensions of audit failure.
The crack of Banca Popolare di Bari: from inefficiencies in accounting and auditing to the bailout of the Italian government. The crisis of mutual banks in Italy
Doni, F
Membro del Collaboration Group
;
2021
Abstract
On last December 2019, Banca Popolare di Bari (BPB) fell in the extraordinary administration procedure as a consequence of the significant losses recorded in 2018 and the relevant drop of the capital ratios below the regulatory thresholds. In other words, it is the collapse of the main grassroots bank set up in the Apulia Region (i.e. in the South of Italy), in the middle of the XIXth century. The social and economic fabric, made up mostly of small enterprises, artisans and savers, witnessed to a gradual worsening of the most relevant player for the local development. The rationale of the BPB’s collapse resides in a combined mix of causes, such as the inconsistent business strategy, the corporate governance path, the delay of the institutional context and the audit failures. First of all, the top management team and the Board of Directors (BoD) opted for some merger & acquistion operations, in order to enlarge the presence in other local communities (i.e. Abruzzo and Calabria regions). In so doing, BPB slowly lost its core identity of grassroots bank and, at the same time, it had not a fitting endowment of resources to compete against the key players in the national market (i.e. UniCredit Group, Intesa San Paolo, etc.). The corporate governance rests on a top management team comparable to a family business, given that just a family had the real power to decide on the bank development and growth policies. Such power, in an indirect way, persisted albeit the removal action of the CEO exerted by the Bank of Italy (i.e. the so called watch dog of Italian banking industry), in 2017. Unlike family business, it is however, necessary to point out that the ownership structure is significantly “pulverised” among a great number of shareholders. In the Italian banking market, the institutional context marked out by a relevant delay in recommending the transformation of cooperative bank in a limited company so as to promoting an effective entrepreneurship path among regulated players too. At last, the audit failures pertain some estimations regarding both the BPB’s going concern attitude and the audit of specific scopes, such as the goodwill, the creditworthiness assessment and the resulting quality of credits recorded in the financial statements. In addition, it is worthwhile to put in evidence that there was no discontinuity in the external auditors, as the Chair of the Board of Statutory Auditors derived from the PWC, the BPB’s independent auditor during the last three years before the collapse.
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