The reform of the public banks that Parliament enacted at the beginning of the nineties in response to these tendencies sanctioned the passing of the public law model of banking; the law separated the institutions’ original social-welfare and charitable purposes from banking activity, assigning the former to the foundations and the latter to companies limited by shares The most compelling reason for the reform, at the urging of the supervisory authorities, was to allow the introduction of organizational and operational models able to ensure higher standards of competitiveness and efficiency.
An important factor was the central role assigned to banks’ capital by the supervisory system then being forged at Community level; the limited scope for Italian public banks to raise funds directly in the equity market hindered their growth and ability to compete.