I. THE VALUATION
I.1 Regulatory Framework
| a) Is there a legal framework in your Member State for the valuation of real estate for lending purposes (loan origination)? If yes: • Is this framework specifically for the valuation of real estate for lending purposes or are provisions enshrined in a broader piece of legislation? • Is it limited to the transposition of European or International Standards or is it broader in nature? • Please provide references and indicate whether it applies to both residential and commercial property. If there are differences between both property types, please explain. |
In Italy there are not standards defined by law. There is a regulatory and normative framework that governs the valuation of real estate used as collateral in lending transactions, though the framework is a mix of statutory provisions, regulatory guidance and self-regulation: • Testo Unico Bancario (“TUB”, Legislative Decree No. 385/1993) o Article 120-duodecies TUB (which concerns consumer real-estate credit secured by mortgage) requires the adoption of “reliable standards for the valuation of residential real-estate assets” when granting credit secured by a mortgage. o More generally, the supervisory regulation by Banca d'Italia (through Circolari, e.g., Circolare 285) references valuations of collateral in order to implement the art 19 (1) of MCD regarding “reliable standard”. https://www.bancaditalia.it/compiti/vigilanza/intermediari/Testo-Unico-Bancario.pdf https://www.bancaditalia.it/compiti/vigilanza/normativa/archivio-norme/circolari/c285/aggiornamenti/Circ-285-Testo-integrale-al-50-aggto.pdf (pag 406) • “Guidelines for the valuation of properties as collateral for credit exposures” developed by the Associazione Bancaria Italiana (ABI), together with professional associations of valuers and banks https://www.abi.it/download/linee-guida-per-la-valutazione-degli-immobili-in-garanzia-delle-esposizioni-creditizie/ • Professional standards for valuers: the valuation profession (engineers, architects, surveyors) must align with national norms (e.g., UNI 11558) and international standards (e.g., International Valuation Standards – IVS; European Valuation Standards – EVS) when performing valuations for credit collateral purposes |
|---|---|
| b) If there is no specific legal framework, is the valuation of real estate for lending purposes covered by other means, e.g. self-regulation, sector recommendations or supervisory guidance? | |
| c) Do national valuation standards exist? Is there any cross-reference to European and/or International Valuation Standards (EVS/IVS)? | |
| d) How has the regulator in your Member State transposed Article 19(1) of the MCD regarding “reliable standards” for the valuation of residential property (into legislation or delivered through a professional body)? Indicate whether and how “reliable standards” are defined and whether and how the content of those standards are prescribed. |
I.2 Valuation Bases & Methodology
| a) What valuation bases (Market Value, Mortgage Lending Value, etc.) are typically used in your Member State for the valuation of property for lending purposes (please disregard at this stage the specific requirements of Art. 229 CRR considering that the Property Value is not an independent basis of value). | In Italy is typically used the Market Value. ISP apply the Prudential Market Value (PMV), see answer to point c) |
|---|---|
| b) Based on what definition? Please provide the definition and reference to where it can be located. | Guidelines for the valuation of properties as collateral for credit exposures” developed by the Associazione Bancaria Italiana (ABI), |
| c) In case other valuation bases are used in your Member State for the valuation of property for lending purposes, please specify the effect, if any, on the final valuation. |
As far as ISP, the value is defined as Prudential Market Value i.e. prudent assessment of the future marketability of the property, taking into account long-term sustainable aspects of the property, the normal and local market conditions, the current use, and appropriate alternative uses of the property. Speculative elements should not be taken into account when estimating the prudential market value |
| d) Depending on the valuation base used, which valuation approaches or methods (comparison, income, cost, etc.) are typically applied in your Member State to value properties for lending purposes in each category? | The applied methodology depends on the type of property and on the available data. Typically for residential RE the comparison approach is used. For income producing property the financial method is used |
I.3 Valuation Report: Form & Content
| a) Does the legal or professional framework in your Member State specific to the valuation of properties provide minimum requirements in terms of the form and content of the valuation report? If yes, please indicate what these minimum requirements are. | Please refer to the “Guidelines for the valuation of properties as collateral for credit exposures” developed by the Associazione Bancaria Italiana (ABI) pag 30 |
|---|---|
| b) Should the form and content of valuation reports be prescribed, are there differences between residential and non-residential properties? Please describe as appropriate. | The bank has established specific form and content of the evaluation report. The scheme is the same for residential and non-residential but of course the content and the applied methodology are different |
| c) If the form or content of the valuation report are not prescribed, what form does the valuation report typically take? Please specify differences between residential and commercial property valuation reports. | The minimum content is the same for residential and non-residential, what is different is the valuation methodology applied |
I.4 Technology & Valuation
| a) Does the legal or professional framework in your Member State provide specific rules/guidance on the use of digital valuation tools (AVMs, Artificial Intelligence etc.)? If yes, what does this consist of and is it restricted to a particular type of property? Please specify whether there is a correlation with the requirements of Article 208(3a) CRR and of section 7.4 of GLOAM or whether the latter provisions are of stand-alone application in your Member State. | Please refers to the “Guidelines for the valuation of properties as collateral for credit exposures” developed by the Associazione Bancaria Italiana (ABI) pag 21. So far the AVMs are not so reliable as such are used but only back test for internal checks. |
|---|---|
| b) For what purpose are digital tools and/or AI employed in your Member State? - Mortgage origination, monitoring and review of property values, revaluation etc. - Capital requirements, covered bond funding, securitisation transactions, mortgage portfolio risk management etc. |
As far as one knows there are not specific purposes; currently ISP do not apply AI applications in the credit granting process; digital tools are used to collect documentation for the valuation of the appraisers; the process of assigning and managing a real estate valuation is carried out through an IT workflow, with appraisals drawn up and delivered in digital format. |
| c) Scope of digitisation: Please determine the scope of automated and digitised tools in your Member State. Are they confined to data collection, do they deliver reliable property values or are they even used to produce full or partial valuation reports including description of locations, infrastructure, building characteristics etc.? If the latter is the case, is internal data used or it is permitted to purchase data from an external data provider? | Currently digitisation is mainly limited to data collection; in the next year BIM for creating digital models and technologies (i.e. drones and 3d scanning) could improve data availability and consequently the activity of the appraiser |
| d) Quality requirements: How are the reliability of the tools and their outputs assessed, e.g. by controlling the inputs, back-testing, supervision and/or plausibility checks by valuers etc.? | |
| e) Do you foresee an increase in the use of automation and digitisation of property valuation processes in the future? Please describe potential technological developments which could impact the valuation profession and accelerate its transformation, notably through the use of AI. | Due to the current regulations of the Italian market, we do not see a potential increase of the A.I in a short time. The contribution of the automation and A.I, in this phase, could be supportive to the quality checks and to the appraiser along the valuation process. |
I.5 ESG, climate risk, transformation risk
| a) How are ESG factors and climate risk taken into consideration in the valuation process? Do Market Values and/or Mortgage Lending Values reflect the ESG characteristics of properties? | In principle Market Values and Mortgage Lending Values could include and discount (partially or totally) the effects of the ESG factors; applying the property values the appraiser should be mitigate the risk of any double counting, estimating the potential contributions of the ESG factors affecting the Market Value and the Property Value. |
|---|---|
| b) Are there rules in your Member State requiring assessment of EU Taxonomy alignment of a property in the valuation report and the subsequent impact of compliance/non-compliance on property values? | Ther are not specific requirements in the ABI Guidelines for the assessment of the EU taxonomy alignment of a property in the valuation report of the appraiser; however, ISP has foreseen the assessment of the EU Taxonomy alignment in the credit granting process. |
| c) Are digitised tools and AI applied in order to capture and/or measure the impact of ESG factors and climate risk on property values? |
Currently there are not digitized tools or AI applications involved in the assessment of the ESG factors and C&E risks in the property values; ISP has developed and internal model to assess them, based on publica data at national level (i.e. national database ISPRA for C&E hazard, construction and reconstruction average costs) and scientific publications (for example on the damage function). Database ISPRA: https://beta.idrogeo.isprambiente.it/app/pir |
I.6 Market Initiatives
| a) Please describe any market initiatives which have been undertaken in your Member State (including cross border initiatives) and which have promoted market best practices and/or transparency of valuation practices. |
|---|
II. THE VALUER
II.1 Regulatory Framework
| a) Is property valuation a regulated profession in your Member State (through legal, regulatory or statutory rules)? | In Italy, property valuations may be performed by several professional figures; in particular, valuation reports can be carried out by professionals registered with official professional bodies such as engineers, architects, agronomists, surveyors, … |
|---|---|
| b) Is the use of the title of valuer protected in your Member State? If yes, by whom? | The title “valuer” is not legally protected; however, the use of officially recognized professional or certified designations—such as those issued under UNI 11558, TEGoVA’s REV/TRV accreditations, or the RICS (Royal Institution of Chartered Surveyors) certification—is strictly regulated by their respective accredited or professional bodies |
| c) If the title of valuer is not protected in your Member State, how do lenders ensure that they work with ‘qualified’ valuers? Are there ‘professional’ certifications for property valuers in your Member State? If yes, please name them. | Please refer to the previous answer 2.1 b) |
| d) Is the regulatory or professional framework the same for all valuers, whether they value residential and/or commercial property? Or are there differences? Please describe as appropriate. | The general regulatory and professional framework for property valuation is the same for all valuers, regardless of whether they appraise residential, commercial, industrial, or special-purpose properties |
II.2 Qualification and Independence
| a) The qualified valuer • How has the regulator in your Member State transposed the requirements of Article 19(2) of the MCD, of Articles 229(1) and 208(3b) of the CRR regarding the instruction of “professionally competent valuers” or valuers who possess the “necessary qualifications, ability and experience” (transposition through legislation or by self-regulation)? Indicate how professional competence and qualification requirements are prescribed. |
The requirements have been transposed in Italy through prudential regulation issued by the Banca d’Italia and operationalized via self-regulation in the banking sector, through the Linee Guida ABI; these guidelines (see requirement R.2.3 – Definizione di Valutatore) embody the banking sector’s harmonized interpretation of what “professionally competent valuers” and “independent” must be. |
|---|---|
| a) The qualified valuer • If professional competence, qualification, ability and experience requirements are not prescribed, what is general practice with regard to professional qualifications? |
Please refer to previous answer 2.2 a) |
| b) The independent valuer • How has the regulator in your Member State transposed the provision in Article 19(2) of the MCD or in Articles 229(1) and 208(3)(b) of the CRR regarding “sufficient independence from the credit underwriting process” or “independence from the loan processing and loan decision process” (through legislation or delivered through self-regulation)? Indicate whether and how the requirement is defined and whether and how it is prescribed. |
Please refer to previous answer 2.2 a) |
| b) The independent valuer • If “sufficient independence” is not prescribed, what is general practice to ensure the valuer is unbiased and not subject to undue pressure? |
Please refer to previous answer 2.2 a) |
II.3 External vs. Internal
| a) Does the legal or professional framework in your Member State specific to the valuation of property for lending purposes lay down rules for banks and lenders as to whom they may use to value properties? • If yes, do credit institutions have the possibility to employ both internal and external valuers? • Is one type of valuer typically employed more frequently than the other? |
Yes, credit institutions have the possibility to employ both internal and external valuers In principle external appraiser are more frequently employed; ISP use external appraisers mainly for RRE sector and internal appraisers for CRE sector. |
|---|---|
| b) If there is/are no legislation/rules regarding the use of external and internal valuers, what is typical practice? | No, there are no legislation/rules regarding the use of external and internal valuers; however, ISP has adopted internal regulations to regulate the use of internal and external valuers. |
II.4 Professional Indemnity Insurance
| a) Does the legal or professional framework in your Member State specific to the valuation of property for lending purposes require: • Valuers to have professional indemnity insurance cover? • Lenders to use only valuers covered by professional indemnity insurance? |
Yes for both |
|---|---|
| b) If there are no such requirements, how are lenders/valuers covered for the risk? • Is/are there legislation/rules in your Member State determining the responsibility of the valuer vis-à-vis his client? If yes, please describe the legislation/rules and the responsibility of the valuer. |
Please refer to previous answer |
III. VALUATION & CAPITAL REQUIREMENT
| a) Property Value How are the Property Value requirements of Article 229(1) CRR transposed in your Member State: • by calculating the Mortgage Lending Value • by Market Value adjustments ◦ adjustments determined by the valuer on a single property by property basis ◦ adjustments determined by the credit institution on a portfolio level based on internal historic market data series ◦ adjustments determined by the credit institution on a portfolio level based on data provided by external research institutes or data providers |
Currently there is not a unique, clear and formal transposition of the Article 229 (1); the Linee Guida ABI refers to the requirement R.5 and in particular to the R.5.5: “…Property Value could be derived from the market value where the latter can be established”. As far as it concerns ISP, the property value is derived by market value adjustments (market trends, marketability, transition risk, flood and landslide risks) determined by the valuer on a single property. |
|---|---|
| b) Monitoring of property values Has the regulator in your Member State laid down criteria regarding "more frequent monitoring where the market is subject to significant changes in conditions"? |
General criteria have been embodied in the Linee Guida ABI, in the requirement 6.2 “Monitoraggio e riesame della valutazione”. It is up to the Banks to better lay down the monitoring requirements, by internal rules and policies. |
| b) Monitoring of property values Has the regulator in your Member State laid down criteria regarding “advanced statistical or other mathematical methods” complying with the technical requirements of Article 208(3a) CRR? |
General criteria have been embodied in the Linee Guida ABI, in the requirement 6.3 “Criteri per i metodi statistici o altri metodi matematici avanzati ("modelli")”. It is up to the Banks to better lay down the monitoring requirements, by internal rules and policies. |
| b) Monitoring of property values Please provide an overview of the different statistical methods/tools complying with Article 208(3a) CRR applied by lenders in practice. |
Intesa Sanpaolo group has in place a dedicated tool («Fair Value Engine») in order to update real estate values on a monthly basis. It is fed with market data provided by external provider of solid reputation. In most cases Fair Value is calculated by applying to appraisal values historical data series that represent italian real estate market trends. |
| c) Review of property values and revaluation • Has the regulator in your Member State laid down criteria which define “review” of the property valuation? If so, what are the minimum and maximum periods within which a review must be conducted? Based on which criteria? |
General criteria have been embodied in the Linee Guida ABI, in the requirement 6.2 “Monitoraggio e riesame della valutazione”. It is up to the Banks to better lay down the monitoring requirements, by internal rules and policies. As far as it concerned for ISP, the valuation of real estate assets must be updated individually according to internal rules which consider relevant, as the case may be, counterparty classification status, residual gross exposure value, adjusted loan-to-value ratio, latest available fair value, impairment rate and date of last valuation depending on the type of property ( 1 year for CRE, 3 years for RRE). Full, desktop or drive-by reappraisals are carried out depending on the status of the counterparty and, in particular: • in the case of counterparties classified as performing (including counterparties classified as proactive), desktop reappraisals are always performed; • in the case of counterparties classified as non-performing other than bad loans o real estate assets mortgaged as collateral for exposures: desktop reappraisals are always carried out, except for reappraisals carried out before credit granting decisions relating to the definition/review of the business strategy, if the strategy involves the liquidation or withdrawal from the relationship; in this case, a full reappraisal must be carried out (or drive-by if access to the premises is not possible), indicating not only the market value but also the immediately realizable value. In all other cases, when initiating the reappraisal process, the responsible management function always has the authority to request a full appraisal instead of a desktop appraisal if deemed appropriate; o real estate leases: a full reappraisal is always performed (drive-by if access to the premises is not possible); • a full reappraisal is always carried out for counterparties classified under bad loans (or drive by if access to the premises is not possible). |
| c) Review of property values and revaluation • Has the regulator in your Member State laid down criteria which define “material decline relative to general market prices”? How are ESG-related considerations assessed as an indicator for a material decline? |
No, there are not specific criterai stated in the ABI Guidelines; ESG-related considerations are not assessed as an indicator for a material decline. |
| c) Review of property values and revaluation • Please provide a description of how ‘reviews’ are carried out in your Member State, e.g. by a new full-size valuation report, a desk-top valuation, a valuation certificate, a plausibility assessment or alike. What criteria are used to determine how the reviews are to be carried out? |
See previous answer to point c, first bullet |
| c) Review of property values and revaluation • For the calculation of average values in accordance with Article 229 (1)(e) CRR in the context of upward revisions of values, are there any guidelines from regulators or lenders addressing the data points to be used and the comparability of properties? Please indicate whether there are requirements from regulators or lenders for ‘sufficient data’ and ‘unequivocal increases of value’. |
No, there are not specific criteria stated in the ABI Guidelines The criteria adopted by Intesa Sanpaolo consists of considering a historical series made up a series of data points for commercial/residential properties (one for each year in which we were able to calculate the property’s fair value). Comparability is ensured by the fact that, for each property, the historical series considered refers only to that particular property. |
IV. VALUATION OF THE COVER POOL
| a) Are valuation rules for cover assets provided at national level in accordance with Article 6(5a) CBD? Are they provided by national covered bond legislation or by professional guidance/standards? | The Italian framework on covered bonds is based on the decree No. 310, of Italian Ministerial of Economy and Finance dated December 14 2006, and the Supervisory Provisions of Banca d’Italia of May 17 2007 |
|---|---|
| b) What valuation bases apply for the valuation of cover assets (Market Value, Mortgage Lending Value)? | Please refer to the section I and II of the Questionnaire; in ISP there is no difference between the rules and the valuation process applied for credit granting (with immovable properties as collateral) and the covered bond cover pool. |
| c) In the case of Market Value valuations, are there any prudential or longer term/sustainable features of the property to be considered? If yes, to what extend? | Please refer to the section I and II of the Questionnaire; in ISP there is no difference between the rules and the valuation process applied for credit granting (with immovable properties as collateral) and the covered bond cover pool. |
| d) How is the requirement that the valuation shall be carried out by a valuer who possesses the necessary qualifications, ability and experience transposed in your Member State (Article 6(5b) CBD)? Are there specific qualification requirements for valuers? | Please refer to the section I and II of the Questionnaire; in ISP there is no difference between the rules and the valuation process applied for credit granting (with immovable properties as collateral) and the covered bond cover pool. |
| e) How is the requirement that the valuer shall be independent from the credit decision process transposed in your Member State (Article 6(5c) CBD)? | Please refer to the section I and II of the Questionnaire; in ISP there is no difference between the rules and the valuation process applied for credit granting (with immovable properties as collateral) and the covered bond cover pool. |
| f) Are there differences in valuation rules and/or qualification requirements with regard to the property type (residential vs. commercial properties) or to the loan amount? | Please refer to the section I and II of the Questionnaire; in ISP there is no difference between the rules and the valuation process applied for credit granting (with immovable properties as collateral) and the covered bond cover pool. |
| g) Are there specific monitoring, review and revaluation requirements for cover pool assets at national level (see Article 129(3) CRR referring to Article 208 CRR)? |
Please refer to pag 6 of the document : https://www.bancaditalia.it/compiti/vigilanza/normativa/consultazioni/2024/2024.12.18-disposizioni-vigilanza/Documento_di_consultazione_18.12.2024.pdf |
| h) Do regulators of your Member State provide a waiver from the limitation of calculating average values for cover assets in case of upward revision of values (Article 129(3) second subpar. CRR)? |
https://www.bancaditalia.it/compiti/vigilanza/normativa/archivio-norme/circolari/c285/aggiornamenti/Circ-285-Testo-integrale-al-50-aggto.pdf https://www.bancaditalia.it/compiti/vigilanza/normativa/consultazioni/2024/2024.12.18-disposizioni-vigilanza/Documento_di_consultazione_18.12.2024.pdf |
V. OTHER
REGULATORY HARMONISATION AND NATIONAL DIVERGENCES
| 1. What challenges does your Member State face in harmonising with EU regulations (e.g. legal, technical, market-related)? | Italy has made progress in aligning with EU valuation and financial regulations. However, challenges remain in legal uniformity, technical harmonisation, and market transparency. Overcoming these issues will require stronger national coordination and continued alignment of valuation methodologies with evolving EVS, IVS, and EU prudential standards. |
|---|
DATA QUALITY, TRANSPARENCY AND COMPARABILITY
| a) What data sources are typically used by valuers in your Member State, and to what extent do they comply with Article 208(3a) of the CRR? |
Valuers use a broad mix of public, private, and field data sources, ensuring comprehensive, verifiable, and independent information: • Official and Public Data Sources: Land Registry (Catasto), Conservatoria dei Registri immobiliari and OMI database from “Agenzia delle Entrate”; ISTAT (Italina National Statistics Institute; • Private Data sources: (i.e. Idealista, Immobiliare.it, Nomisma, Scenari Immobiliari As far as it concerns the Energy and building registries (i.e. APE databases) data do not have always fully open access are not collected or accessible through a single, national-level database. |
|---|---|
| b) What measures have been taken to improve transparency and comparability of valuation data within your Member State? | Currently, the valuation data are fragmented and not fully open accessible. |
| c) Is there a central database or platform for sharing valuation data in your Member State? | No, there is not a central database for sharing valuation data. |
EDUCATION, TALENT PIPELINE AND PROFESSIONAL DEVELOPMENT
| a) What training programs or continuing education opportunities are available for property valuers in your Member State? | There are different training programs and continuing education programs, mainly proposed by organizations, private entities, professional bodies. |
|---|---|
| b) Is there collaboration between universities, professional bodies, and regulators to ensure a sustainable pipeline of qualified valuers? | Yes, there is collaboration between universities, professional bodies and regulators to assure a pipeline of qualified valuers, with mandatory training courses and certifications |
| c) How does the EU regulatory environment influence the development and attractiveness of the valuation profession? | Currently there is no clear evidence (supported by data, survey) of any positive or negative effect of the EU regulatory on the development of the valuation process or the attractiveness of the valuator profession |
FUTURE TECHNOLOGICAL AND REGULATORY DIRECTIONS
| 1. What technological developments are expected to impact valuation processes in your Member State over the next five years? | In the next five year, potential impacts on the valuation process could by due to the progressive development, expansion and exploitation of the A.I applications, specific for the real estate sector; in parallel the expansion and exploitation of the BIM application could improve data availability and transparency. |
|---|