Milan prosecutors have opened an investigation into alleged false accounting at Italian specialist lender BFF Bank (BFF.MI), two sources with direct knowledge of the matter told Reuters on Monday.
BFF confirmed the probe in a statement, acknowledging that Milan prosecutors began investigating at the end of 2023.
“BFF has, from the very beginning, made itself available to cooperate with the public prosecutor’s office and to provide any information that may be of assistance to the investigating authorities,” the bank said.
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The probe focuses on the accuracy of BFF’s financial statements, the sources said. Italian daily Milano Today Dossier first reported the investigation. BFF’s share price fell as much as 14% after the Reuters report and closed down 12%. The stock is now down nearly 60% year-to-date, having already lost 44% on February 2 alone when BFF announced it was booking extraordinary charges and restating 2024 accounts.
The investigation includes BFF’s market disclosure earlier this month of a €95 million ($113 million) one-off charge in 2025, the sources said. No individuals are currently under investigation. Background on BFF’s Business and Recent Troubles. BFF specializes in factoring—purchasing suppliers’ receivables (primarily from public sector entities) at a discount and then collecting the full amount when the debtor pays.
The business model relies heavily on accurate classification of overdue public-sector loans and realistic estimates of collection timelines. The Bank of Italy imposed a ban on BFF paying dividends to shareholders after its 2024 audit, challenging the bank’s classification of overdue public-sector receivables—particularly how it counted days in arrears. This regulatory action triggered a series of disclosures and restatements.
On February 2, 2026, BFF announced it had identified an error in booking €54 million in factoring proceeds prior to June 2023, leading to a restatement of 2024 accounts. The bank also disclosed it would book approximately €95 million in one-off charges in 2025, consisting primarily of provisions on receivables tied to negative court rulings under appeal, plus additional costs linked to longer-than-expected collection times. BFF described these measures as a management decision following internal evaluations.
Market and Investor Reaction
The combination of regulatory scrutiny, dividend ban, restatements, and extraordinary charges has severely eroded investor confidence. BFF’s shares have lost nearly 60% year-to-date, reflecting concerns about asset quality, provisioning adequacy, collection timelines, and potential further regulatory or legal consequences.
The 12% drop on Monday was the sharpest single-day decline since the February 2 disclosure, signaling that the market views the Milan prosecutors’ investigation as a serious escalation rather than a routine inquiry. The probe’s focus on financial statement accuracy raises questions about the reliability of past reporting and could lead to additional restatements, penalties, or management changes if material irregularities are found.
BFF’s business model—factoring public-sector receivables—has historically been profitable due to predictable cash flows from government and public-entity debtors. However, prolonged payment delays, court challenges to certain receivables, and changing regulatory interpretations of overdue classifications have created headwinds.
The Bank of Italy’s dividend ban and the ongoing Milan investigation highlight increasing regulatory scrutiny of Italian specialty lenders and public-sector exposure. Similar pressures have affected other factoring and specialty finance players in Europe, where public-sector debtors (hospitals, municipalities, regional governments) often face budgetary constraints and slow payment cycles.
The key risks for investors now include:
- Potential further provisions or restatements if the investigation uncovers additional misclassifications.
- Prolonged dividend suspension limiting shareholder returns.
- Reputational damage and funding cost pressures if counterparties or rating agencies react negatively.
- Possible management or governance changes if the probe escalates.
BFF’s statement emphasized full cooperation with authorities and portrayed the €95 million charge as a prudent, management-driven decision rather than an admission of wrongdoing. However, the market’s sharp reaction suggests investors are pricing in a higher probability of adverse outcomes.
The investigation is still in early stages, and no formal charges have been filed against the bank or individuals. Under Italian law, the opening of a probe does not imply guilt; it triggers a fact-finding process that may ultimately be closed without charges.
The outcome, however, could range from a quiet closure to more serious findings requiring additional provisions, governance changes, or strategic reevaluation.