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06 June 2003
The Italian Banking Association (ABI) and Italian consumer associations have signed a protocol of agreement setting out contractual conditions which govern guaranties requested by banks in order to grant credit.
The protocol, which must still be approved by the Bank of Italy, was published in ABI Circular 9 of April 28 2003. It introduces some important procedural changes in order to protect existing and future guarantors.
Pursuant to the contract signed with the guarantor, the bank must send to the guarantor periodic communications regarding the debt and credit positions of the guaranteed account. This statement must be provided to the guarantor by way of an official communication and must be sent automatically, not at the express request of the guarantor.
The protocol gives banks more time in which to commence a recovery action. It releases banks from the obligation to recover outstanding credit within a six-month period, in compliance with Article 1957 of the Civil Code. This amendment buys the guaranteed debtor more time to ride out a difficult phase by postponing recovery of the credit against the guarantor.
The protocol further confirms Italian Supreme Court resolutions which provide
that the guarantor can withdraw unilaterally from the contract by means of a simple
communication to the bank.(1)
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