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Introduction

Banco ambrosiano was an Italian bank founded in 1896 that collapsed in June 1982. Its chairman Roberto Calvi was involved in massive fraud and the bank lacked proper supervision. This led to losses of 800 million and a loss of depositor confidence, causing the bank to declare bankruptcy. In response, other Italian banks provided funds, a new bank was created, and banking regulations were revised to improve supervision of foreign branches.

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26 views1 page

Introduction

Banco ambrosiano was an Italian bank founded in 1896 that collapsed in June 1982. Its chairman Roberto Calvi was involved in massive fraud and the bank lacked proper supervision. This led to losses of 800 million and a loss of depositor confidence, causing the bank to declare bankruptcy. In response, other Italian banks provided funds, a new bank was created, and banking regulations were revised to improve supervision of foreign branches.

Uploaded by

isteaq ahamed
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Introduction

Banco ambrosiano was a commercial bank based in milan which was founded in 1896. It had many
subsidiaries located overseas in Luxembourg, Nassau, Nicaragua and peru. Luxembourg subsidiary was
called banco ambrosiano holdings (BAH). Banco ambrosiano owned 69% of BAH. BA collapsed in june
1982 . At that time Roberto calvi was the president of BA.

Reasons of collapse.

The main reason of collapsed was the death of the chairman Roberto calvi. Before death, the chairman
was missing for 10 days that created tension among depositors . Depositors was not clear about banks
activities .They felt unsecured about their deposits .

Massive scale of fraud conducted by management . The chairman himself was involved in these fraud.
Investment of BA was unclear and suspicious.

A number of gaps in the supervision of international banks. The bank of Italy lacked the statutory power
to supervise the banks .There was no close relationship between senior management and central bank.

Impacts

Losses amounted to 800 million , they were linked to offshore investments involving the vaticans bank.

After these losses depositors lost their confidence and started to withdraw their deposits from the bank
and bank shares fall by 30-40 % within a day .

Eventually BA was announced bankrupt in june,1982 for this massive collapse.

Reforms.

After the collapse bank of Italy launched a lifeboat rescue operation. In that operation seven Italian bank
provided 325 millon to cover the gaps left by the flight of deposits.

BA was announced bankrupt and New bank NBA (Nuovo banco ambrosiano) was created to take over
the BA’s Italian operation.

The 1975 Basel Concordat was revised in 1983 to cover the gaps in supervision of foreign branches and
subsidiaries. This action helped the central bank to monitor the bank more effectively.

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