Until the 1990s, the main objective of the Italian banking regulation was to foster local de- velopment and to ensure financial stability. In general, mergers between public banks were not allowed; and for savings banks, there were strict authorization procedures for such mergers. This system was quite successful in supporting and stimulating the growth of the industrial sector, which was (and to a considerable extent still is) characterized by a large number of small and medium enterprises. But at the beginning of the 1990s, the system started to show its weaknesses. The growing needs to operate in an international environment and to achieve greater efficiency and per- formance,.
