The Financial Sector Assessment Program (FSAP) undertook a targeted review of the banking regulation and supervision of Italy’s Less Significant Institutions (LSIs). The review was carried out as part of the 2026 FSAP and was based on the regulatory and supervisory frameworks in place as of November 2025. Since the regulation and supervision of significant banking institutions (SIs), including Italian SIs, were extensively covered as part of the 2025 Euro Area FSAP, this note focuses on the prudential regulation and supervision of LSIs. In scoping this targeted review, the IMF team took into account the recommendations of the previous 2020 Italy FSAP, as well as relevant Euro Area and global regulatory and market developments.