Interlocking directorates in the banking and financial industry: The Italian way

This article examines a recent provision prohibiting interlocking directorates between companies operating in the Italian banking, financial and insurance industry. The new provision prohibits a director, statutory auditor or management official of a bank, insurance or financial company from simultaneously serving as a director, statutory auditor or management official of an unaffiliated bank, financial or insurance company or holding company. In light of the main findings of the antitrust literature, and of the empirical evidence on the persistence and pervasiveness of dual service in the board of directors of almost all our most important depository and financial institutions, a general and ex ante prohibition of interlocking directorates seemed highly desirable. Unfortunately, the provision was written too quickly because it was part of a package of measures aimed at addressing the very strong financial crisis that has hit Italy in the last years. The guidelines issued by the Bank of Italy together with other regulatory agencies only partially solved the major concerns that the new provision had raised.