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CMS Italy Newsletter | 07 May 2015

Italian Courts take position on interest compounding in banking transactions: the prohibition is effective since the 1st of January 2014

07/05/2015

Following to the amendments made by Law no. 147 of December 27, 2013 (so called “2014 Stability Law”), art. 120 of the Italian Consolidated Banking Act (“CBA”, Legislative Decree No. 385/1993) explicitly prohibits the interest compounding, by providing that “interest periodically compounded cannot generate further interest which shall accrue only on the principal".

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Italian Courts take position on interest compounding in banking transactions: the prohibition is effective since the 1st of January 2014
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Authors

Portrait of Paolo Bonolis
Paolo Bonolis
Partner
Rome
Portrait of Maria Giovanna Pisani
Maria Giovanna Pisani
Counsel
Rome