Mediobanca plans historic sale of stakes in corporate Italy

Bank moves under pressure to improve returns for shareholders

Italian bank Mediobanca plans to sell stake sin a number of major Italian businesses

Italian bank Mediobanca plans to sell stake sin a number of major Italian businesses

 

Mediobanca, under pressure to improve returns for shareholders, plans to sell almost all of its stakes in major companies, ending half a century of influence at the heart of Italian business to focus on banking.

The bank’s chief executive Alberto Nagel said today Mediobanca aimed to cut 2 billion euros of equity holdings through sales and writedowns to concentrate on its core banking operations, a move that will push the bank in the red this year.

“Our business model is considered too complex, investors have difficulties in understanding how much it is worth. This is also due to our big exposure to equity holdings,” Mr Nagel, unveiling the firm’s 2014-16 business plan, told analysts and investors.

Mediobanca, founded in post-war Italy by legendary banker Enrico Cuccia, sits at the centre of a web of corporate holdings, the product of a strategy focused on influence over Italy’s corporate landscape rather than profit.

But Italy’s economic crisis and the introduction of new bank capital bank rules that make it costly to hold unprofitable investments have pushed Mediobanca to relinquish control.

Mr Nagel said Mediobanca would reduce by 3 percentage points its 13.2 per cent stake in Italy’s largest insurer Generali, which is in the middle of a n aggressive turnaround plan, but get ready to sell all other strategic holdings.

The Milan-based bank plans immediately to book writedowns of €400 million to reflect the market value of major holdings and pave the way for their sale. This will result in a loss of about €200 million for the financial year ending June 30th. – Reuters