The Bank Crisis in Italy

Abstract

THE life, death and miraculous resurrection of the Banca Italiana di Sconto deserve a somewhat detailed consideration, for in describing them light will be thrown on certain aspects of the Italian financial system, of whose tendencies they exhibit the extreme consequences.The Banca Italiana di Sconto (Italian Discount Bank) is of recent origin; it was founded at the end of 1914 by a group of Italian and French financiers with an initial capital of only 15 million lire; its real and effective banking activity did not begin until June 1915, when it was amalgamated with the " Societa Bancaria Italiana " of Milan and the " Societa Italiana di Credito Provinciale" of Busto Arsizio.Of these two, the first was an unstable concern, which not long before had only escaped bankruptcy through the intervention of a consortium of banks headed by the Banca d'Italia; the second was a recent amalgamation of several small local banks.During the war the Banca Italiana di Sconto developed enormously, and to this development corresponded the gradual increase of its capital to 315 millions and the opening up of branches in every part of Italy and abroad.Whereas in Italy the tendency of the banks to group together has mostly taken the form of a concentration of minor banks round a larger one, the former preserving their autonomy and subjecting themselves only to an indirect influence, the growth of the Banca Italiana di Sconto was largely due to the complete incorporation of local banks.The culmination of this expansion was reached in 1920, when the branches of the Banca di Sconto (which were only sixty-eight in 1915) reached the number of 220, eight of which were in foreign countries, besides four foreign affiliated banks.This number is remarkable when we consider that the other three largest Italian joint-stock banks (Banca Commerciale Italiana, Credito Italiano and Banco di Roma) had altogether, at the same period, a total of 269 branches.The Banca di Sconto thus found itself in the position of an amalgamation of a series of small banks, with no nucleus-that is, no powerful central institution, able to assimilate the banks incorporated by reducing them to a common type.Each of these minor banks, though transforming itself into a branch of

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