BANKING AND FINANCE | Rules on Replacement Plans provided under Article 28 of the Benchmark Regulation implemented in Italian banking law

On 10 January 2024, Article 118-bis of the Italian Consolidated Law on Banking entered into force. It regulates the procedures through which banks and financial intermediaries must implement the actions to be taken in the event of material changes to, or the cessation of, relevant benchmarks which may be used in financial instruments and financial contracts (the “Replacement Plans”) in accordance with Regulation (EU) 2016/1011 (the “Benchmark Regulation”). Specifically, banks and financial intermediaries shall publish and keep updated the Replacement Plans provided under Article 28 of the Benchmark Regulation and inform the clients at least once a year about such updates. The interest rate clauses shall allow the identification of changes to the benchmark or the substitution benchmark, also by reference to the Replacement Plans, in the event of material changes to or the cessation of relevant benchmarks. In the event of changes to or the cessation of the relevant benchmark, banks and financial intermediaries shall notify the client within 30 days. The client may terminate the contract within 2 months of receiving the notification, with the application of the former contractual conditions, including the interest rate, for the final payment. Any changes to the relevant benchmark made without complying with the provisions of Article 118-bis shall be deemed invalid. In case of ineffectiveness, the substitution benchmark provided under the Benchmark Regulation shall apply. The above-mentioned provisions apply to contracts involving operations and services governed by Title VI of the Italian Consolidated Law on Banking. By 10 January 2025, banks and financial intermediaries shall: (i) inform clients on the publication of the Replacement Plans and (ii) notify clients in writing of the amendments to the relevant clauses in order to implement the provisions of Article 118-bis. The notice shall include the wording “Unilateral changes to the terms and conditions of the contract

Newsletter n. 94 – March 2024