Banca Ifis replaces its chief after a partially unfavourable Bank of Italy inspection

The Bank of Italy questioned whether Banca Ifis's business model can last. The bank is selling its entire unpaid-loan business, and it has not put a figure on what the rest of the repair will cost.

Inspectors worked inside the bank from January through June. On Wednesday they delivered a report that the bank said ended in a partially unfavourable assessment. Besides the business model, it found problems in the checks against money laundering, in technology and operational security, and in credit work, including unpaid loans bought from others and loans packaged into securities. It also questioned internal controls and how the bank is governed. The board said it is still reviewing the report. The supervisor wants two plans, one on money-laundering checks and compliance, and a broader repair covering governance, new expertise, stronger controls, a new business plan, a review of credit and unpaid-loan processes, and tighter technology security. The bank said that work has started.

What it has already cost

The charges did not start on Friday. On Thursday, June 25, with the inspection still under way, the bank announced 70 million euros of extra adjustments: about 30 million euros on its own credit exposures, and 40 million euros on packaged unpaid loans at illimity, the lender it bought last year. By June 30 it had booked 34 million euros of that. First-half net profit was 8 million euros, after about 30 million euros of adjustments from the review that followed the inspection. The next session, the shares fell 36.9%.

Before Friday's 9:05 release, the shares had already fallen in recent sessions, including 4.6% on Thursday. On Friday they fell 14.5%, and trading was automatically suspended. They traded as low as 11.52 euros, their lowest price in the past year and 17.8% under Thursday's close, then recovered part of the drop to close at 12.45 euros, down 11.2%.

That close left the bank worth 760 million euros. The share price is down 50.9% since the final close of 2025. Italy's banking share index rose 1.4%.

A merger, and a sale

On Wednesday the Bank of Italy also authorized Banca Ifis to absorb illimity. The authorization, which the bank called full and unconditional, covers the merger and does not close the inspection. Banca Ifis expects to complete the combination this year, and it repeated a target of 75 million euros a year from 2027 in the savings and extra income it expects from putting the two banks together.

The repair plans, the bank said, do not block a sale of the entire unpaid-loan business. Early offers, not yet binding, have come in, and it wants a firm bid by the end of the year. Any sale still needs approval from regulators. Intermonte is keeping a Neutral rating, neither a buy nor a sell, and a target of 15.9 euros. It calls regulation its main concern. The firm says the market will now focus on the capital and accounting effects of what the supervisor has asked for, and on how those unpaid loans are valued in a sale, including any discount to the value on the bank's books.

A chief until the next meeting

The bank did not say why Frederik Geertman left. He led the takeover of illimity. In his letter to shareholders in the 2025 annual report, he called the bid a strategic transaction that created "a new, stronger and more competitive" group, and in August he presented the half-year results. On Thursday the board accepted his immediate resignation and named Raffaele Zingone chief executive until the next meeting of shareholders.

Zingone has been at Banca Ifis for more than 20 years. He has been a co-general manager and the chief commercial officer since 2021, and this year he has been chief executive of illimity, running its integration. Our read is that the person now in charge is the one already integrating illimity, while the supervisor has asked the board to add new expertise. Fabio Lanza, a co-general manager and the chief operating officer since 2021, is to become general manager if the Bank of Italy judges him suitable.

What is still open

The bank has put no figure on the rest. A review of how its loans are classified and valued, begun by the board on Thursday, is not finished, and two penalty proceedings are open. Banca Ifis has 45 days to file its arguments. The Bank of Italy has 90 days to decide on extra capital. A higher requirement would narrow the gap between core capital of 13.4% of assets weighted by risk at the end of June and the 9.9% the bank is already required to hold.