When Corrado Passera arrived at Banca Intesa as chief executive two and a half years ago, Italy’s biggest bank was an unruly and inefficient organization with a performance to match. Cobbled together over two decades of mergers and amalgamations, the bank had three general managers (a position equivalent to chief operating officer) and 18 different domestic retail networks. It offered a bewildering array of 1,333 products, including no fewer than 48 types of checking account. Intesa’s wholesale side bled red ink profusely from exposures to some of the decade’s biggest corporate blowups.
“The structure we inherited was something beyond comprehension,” the 50-year-old executive recalls in an interview with Institutional Investor. “We seemed to be involved in every bankruptcy around the world -- Enron, WorldCom, etc. It was a critical situation, but I knew we had the raw materials for a very strong bank.”
Today that claim looks to be much more than wishful thinking. Passera, a turnaround expert who previously led recoveries at Olivetti and Italy’s postal system, has cut costs impressively at Intesa. He has laid off 7,200 employees, or 17 percent of the bank’s domestic retail workforce, while somehow managing to secure the cooperation of Italy’s famously militant labor unions. He has streamlined the bank’s retail network and product offerings and centralized its technology platform and back-office functions. Those efforts have slashed costs by more than E800 million ($1 billion) a year -- and saved Intesa. “Without the reduction in cost we’ve achieved, it would have been impossible to turn the bank around,” Passera says flatly.
Now Intesa is not only alive but thriving, with net income up by nearly a third, to E1.34 billion, in the first nine months of 2004. Intesa, which rose out of the ashes of the collapsed Banco Ambrosiano in the early 1980s, has seen its share price rise 145 percent since Passera announced the restructuring plans in September 2002, compared with a 16.5 percent increase in the Dow Jones Euro Stoxx banks index over the same period. The shares traded at E3.45 in mid-December, up nearly 13 percent in the past 12 months.
“Under Passera, Intesa has gone from being Italy’s worst-managed bank to being its best-managed bank,” asserts Bertrand Veraghaenne, a banking analyst at Petercam Asset Management in Brussels, who is advising the fund company’s portfolio managers to buy Intesa shares.
To sustain the earnings momentum, Intesa now must move from cutting costs to increasing revenues in its retail banking network, which advanced by just 1.6 percent in the first three quarters of 2004. Passera aims to accelerate growth by aggressively selling mortgages and consumer loans, along with fee-generating products like insurance, mutual funds and credit cards. He also intends to bolster operating margins by instilling some much-needed discipline in the bank’s lending. He is tightening up loan criteria and shifting Intesa’s emphasis away from large corporates (it took big hits on loans to Enron Corp., WorldCom, Marconi Corp. and Parmalat) to small and medium-size enterprises. For 2004 the bank’s provisions for bad debts are expected to be roughly half the E2.2 billion recorded in 2002. Passera needs to increase revenue growth and reduce provisions to meet his target of boosting pretax income by more than 40 percent next year, to E4 billion.
This is a tall order. Unfortunately for Passera, Italy’s economy isn’t providing much help: It is forecast to grow by a little more than 1 percent this year -- one of the slowest rates in the 12-nation euro zone. This sluggishness will make it hard for Passera to achieve his ambitious growth targets, analysts say. And even if the CEO achieves his profit target, Intesa’s return on equity will be a modest 14.8 percent next year, up from the current 11 percent but trailing the European average of 15.7 percent, according to analysts at Goldman, Sachs & Co.
Part of the problem is that even after Passera’s streamlining, Intesa remains much more fragmented than its chief rival, UniCredito Italiano. The group still has 12 domestic banking brands in two separate divisions and operates three IT platforms. Intesa also has 14.5 employees per branch, compared with UniCredito’s 12.6.
Intesa shares already trade at 11.3 times estimated 2005 earnings. That’s a significant premium to UniCredito, Italy’s most profitable bank, which trades at a multiple of 10.5, and even to the European banking average of 10.9 times earnings, according to Goldman Sachs.
“Passera is making the best out of a fragmented group,” says Madeline Hoffman, a buy-side analyst at Bank Julius Baer in Zurich. “Given its current structure, I doubt it can ever be much more than an average bank on the European level, even if Passera hits his current targets. We think investors may be in store for a disappointment.”
Passera, not surprisingly, dismisses such skepticism, contending that some financial benchmarks are too narrow to gauge the full extent of Intesa’s recovery and profit potential. “Being a successful bank means getting everything right, and that can’t be judged by comparing only ROE or the number of employees per branch,” he says in an interview at the bank’s imposing 19th-century Renaissance-revival-style headquarters, known as the Ca de Sass, or House of Stones, just behind Milan’s La Scala opera house. “We are becoming one of the best banks in Europe by optimizing our profitability, the stability of our results and our risk profile.”
The banker’s success so far has won him support from many fund managers. “Passera is basically building up a low-risk, retail-oriented business,” says Davide Boglietti, a fund manager at Fondi Anima in Milan, which manages E1.2 billion in assets and has a small, undisclosed position in Intesa. “It’s not that surprising that he has more employees per branch than competitors or that his ROE isn’t as high as a lot of banks with more assets devoted to more volatile but higher-return investment banking.”
One challenge facing Passera is Intesa’s scale. Though it is Italy’s largest bank by assets, it ranks only 29th in Europe by assets and 13th by market capitalization, with a value of E23.2 billion. It trails far behind Royal Bank of Scotland, which has a market cap of £53.3 billion ($100.2 billion), and Grupo Santander, the Spanish bank that is the euro zone’s largest, with a market cap of E56.4 billion, since its recent acquisition of Abbey National. Even UniCredito looms over Intesa, with a market cap of E26.7 billion. If a wave of cross-border consolidation hits Europe, as some analysts predict, Intesa’s relatively small market cap will make it harder to acquire others and will leave it vulnerable to larger rivals.
Passera probably doesn’t have to worry about a foreign predator in the near term, even though France’s Crédit Agricole is Intesa’s largest shareholder, with a stake of 18 percent. Crédit Agricole can’t lift its stake above 20 percent without the approval of the Bank of Italy, which supervises Italian banks and whose governor, Antonio Fazio, has effectively declared the country off-limits to foreign buyers.
Both banks say the stake provides stability -- read, a poison pill against any takeover attempt on Intesa. The stake also supports their joint venture in Italian consumer finance, Agos Italfinco. Many investors, however, suspect that the French have greater ambitions.
“They’ve got an awful lot of money tied up in what’s just supposed to be an alliance,” says Veraghaenne. “I’ve got to believe that Crédit Agricole views their stake as a down payment on an eventual acquisition.”
Passera dismisses the suggestion of a merger with Crédit Agricole and discounts the prospect that the Santander-Abbey deal will usher in a wave of cross-border mergers in Europe. “It is not even conceivable that Intesa would merge with Crédit Agricole,” he says. “Given the vast differences in terms of regulation, banking products and taxes, I still do not believe it is possible to effectively integrate banks cross-border.”
FOR ALL OF THE CHALLENGES FACING PASSERA, Intesa has come a long way since the notorious events that gave birth to the bank two decades ago.
On June 18, 1982, the body of Roberto Calvi, then chief executive of Banco Ambrosiano, was found hanging beneath Blackfriar’s Bridge in London, trussed up and weighed down with stones in his pockets. Some $1.3 billion had disappeared from the bank’s books through a network of dummy corporations stretching from Luxembourg to Panama. Most of the funds were never found, and Italian investigators have never determined who controlled the shell corporations or masterminded the embezzlement. Although an official inquest at the time ruled Calvi’s death a suicide, Italian prosecutors last May charged three Italian men and an Austrian woman with murdering Calvi to keep him from revealing details of the fraud. The case is being investigated by the Procura della Repubblica di Roma and London’s Metropolitan Police, although no trial date has been set.
Seeking to contain one of the most sensational financial scandals of the century, thenBank of Italy governor Carlo Azeglio Ciampi turned to Giovanni Bazoli, an administrative lawyer from Brescia and the nonexecutive vice chairman of one of Ambrosiano’s biggest creditors. Bazoli immediately put Milan-based Ambrosiano into receivership, arranged for a consortium of seven regional banks to acquire the bank’s good assets for $241 million and left the rest to liquidators. Nuovo Banco Ambrosiano, which retained the old bank’s network and sound assets, opened for business at the Ca de Sass.
Bazoli, who rarely talks to the press and declined to be interviewed for this article, hired Pier Domenico Gallo -- now deputy chairman of Meliorbanca, a Milan-based investment bank he founded in 1991 -- to run the new bank’s day-to-day operations while he devoted himself to corporate strategy. A devout Catholic with close ties to the Vatican and officials at the Bank of Italy and the Ministry of Finance, Bazoli used his connections and negotiating skills well. He floated an 11.3 percent stake in the bank on the Milan stock exchange for 171 billion lire ($92.6 million) in 1985, starting a process that would free the bank from the control of the banking consortium by the end of the decade. In 1989 he used his stake of just more than half of Banca Cattolica del Veneto, the most profitable bank in the Veneto region of northeast Italy, to merge the two institutions and create Banco Ambrosiano Veneto, or Ambroveneto, with $57 billion in assets.
In late 1989, Bazoli fended off an attempt orchestrated by Mediobanca, the powerful investment bank located just two blocks away, to sell Ambroveneto to Banca Commerciale Italiana, then the country’s third-largest bank. He did so by persuading Crédit Agricole to buy an 11 percent stake in Ambroveneto for more than $200 million -- a white knight purchase that was widely believed to have had the support of the Bank of Italy and the Italian Treasury. In 1997 he outmaneuvered BCI to acquire another large northern Italian bank, Cassa di Risparmio delle Provincie Lombarde, or Cariplo, for E4.5 billion. The group rechristened itself Intesa -- an Italian word that means “understanding” -- and strengthened its dominance of northern Italy’s retail banking market by acquiring three more midsize banks.
Bazoli’s greatest coup came in 1999, when he outfoxed UniCredito in a battle over BCI, his former stalker. UniCredito had made a hostile E8.5 billion bid for BCI, but the offer was blocked by Fazio, who had succeeded Ciampi in 1993 as governor. Ostensibly, Fazio feared that an unfriendly deal would destabilize the country’s banking system. With Fazio’s support, Bazoli persuaded the late Enrico Cuccia, then chairman of Mediobanca, BCI’s most important shareholder, to agree to a friendly takeover of BCI by Intesa for only E7.6 billion. Both Fazio and Cuccia clearly preferred Bazoli’s federal model, in which regional banks retained their own management, sales and distribution, to the centralized strategy of UniCredito’s chief executive, Alessandro Profumo.
Nonetheless, the inefficiency of that federal management structure soon became apparent. Italy’s adoption of the euro caused Italian interest rates to drop sharply, ending the highly profitable practice by Intesa and other Italian banks of investing in Italian government bonds. Bazoli belatedly tried to rationalize Intesa’s unwieldy group of 18 domestic retail banks by announcing plans to integrate the three largest entities: Ambroveneto, BCI and Cariplo. Surprisingly for a man whose strength is forging compromises, he undermined his own plan in 2000 by replacing his capable CEO, Carlo Salvatori. A key lieutenant whom Bazoli hired as general manager at Ambroveneto in 1990 and made chief executive four years later, Salvatori today is chairman of UniCredito. Bazoli appointed two group chief executives in his place and inserted three general managers beneath them: one each from Ambroveneto, BCI and Cariplo. “He wanted to make sure everyone’s interests were represented, but the management changes made things worse,” explains a former Intesa executive. “Instead of a seamless group, we wound up with three perpetually battling entities as well as a very confusing jumble of banks with overlapping branches, products and sales and marketing teams.”
Intesa made healthy profits between 1998 and 2000 as the buoyant global economy more than offset the bank’s inefficiencies. The bank also aggressively expanded its international lending exposure during this period, leading to problems when the economy turned sour in 2001. Intesa’s Latin American network, Banque Sudameris, founded in 1906, racked up E2 billion in losses in 2001 and 2002 as financial crises hit operations in Argentina and Brazil. Intesa’s rush into wholesale lending also left it with a string of dud loans: E350 million to Enron, E158 million to WorldCom, E200 million to Marconi (the U.K. telecommunications company that was restructured by the courts) and E360 million to Parmalat. The bank took loan-loss provisions totaling E878 million for those four exposures alone between 2001 and 2003.
The combination of woes caused the bank’s profit to plunge by 80 percent in 2002, to E200 million, and pushed its tier-one capital ratio down to a worrisome level of 5.3 percent, prompting Standard & Poor’s to downgrade Intesa’s rating by one notch, to single A-minus. The bank’s share price hit an all-time low of E1.41 in September 2002, leading investors to worry about its very solvency. “It was quite scary,” recalls Petercam’s Veraghaenne. “It looked like the bank had been hit by the perfect storm and might not survive.”
In the midst of this tumult, Bazoli turned to Passera, who had developed a reputation as one of Italy’s top corporate fixers. For both men, it would prove to be a case of second time lucky. Bazoli had successfully recruited Passera once before, as chief executive of Ambroveneto in 1996 after Salvatori left to run Cariplo, in what turned out to be preparation for the merger of the two banks. Passera wasted no time fashioning a plan to segment clients by income level and sell fee-generating products to retail and corporate customers alike. The plan implied a much tighter integration of the group’s subsidiaries, however, an idea that went out the window when the Cariplo acquisition was announced in September 1997. Passera left four months later, replaced by the returning Salvatori.
“I chose to leave because Intesa was going to have a confused management structure. I believe in strong, clear responsibilities,” Passera explains. He made sure to get just such a clear mandate when Bazoli called him back to Intesa in 2002.
Today there is a clear bond of professional respect and friendship between the two men. While Passera focuses on Intesa’s operations, Bazoli puts his political skills and connections to work to help the bank maintain good relations with shareholders and regulators. Bazoli is close not only to Bank of Italy officials like Fazio but also to the conservative northern businessmen who control the charitable foundations that are among the group’s largest shareholders. (Fondazione Cariplo and Fondazione Cariparma are the second- and fourth-largest shareholders in Intesa, with stakes of 9.4 percent and 4.4 percent, respectively.) Bazoli also maintains good relations with 80-year-old Antoine Bernheim, a former Lazard partner and chairman of Assicurazione Generali, the Trieste-based insurer that is Intesa’s third-largest shareholder. Generali owns 6.1 percent of Intesa and 50 percent of Intesa Vita, a life insurance joint venture that the two groups launched in January.
“Let’s not forget that Bazoli’s considerable talents transformed a small bankrupt regional entity, victimized by criminals, into what is today the largest bank in Italy,” says Passera. “He’s certainly one of the men I admire most, and one of my best friends.”
THE SON OF A HOTEL OWNER, PASSERA GREW UP in the town of Como on the picturesque lake of the same name in northern Italy; his brother Antonello still runs the family hotel business there. After earning a BA in business at Milan’s prestigious Bocconi University, Passera obtained an MBA from the University of Pennsylvania’s Wharton School before returning to Milan in 1980 as a consultant with McKinsey & Co., specializing in banking and insurance. Two years later he married his wife, Cicina, with whom he has two teenage children. He spends weekends and vacations at Lake Como, sailing, biking and walking with his family.
In 1985, on the day he was to be made a McKinsey partner, Passera got a call from industrialist Carlo De Benedetti asking him to become a senior adviser at his holding company, CIR. “I wasn’t tired of being a consultant, but if I ever wanted to enter the real world of operations and business development, I understood there might never be a better opportunity,” Passera recalls. He accepted the challenge, and over the next seven years he helped turn around CIR’s poorly performing bank, Credit Romagnolo, its publishing business Mondadori, and Gruppo Espresso, a newspaper group that owns the influential Italian weekly L’espresso. De Benedetti rewarded his efforts by appointing him chief executive of Olivetti, his faltering computer group based outside Turin, in 1992. Passera’s decision to dump the company’s subscale and unprofitable computer operations and focus on telecommunications proved an inspired choice that saved Olivetti.
Passera sealed his reputation when, after his short stint at Ambroveneto, the government tapped him in January 1998 to head Poste Italiane, which had not made a profit in half a century. Passera laid off nearly 17,500 employees, 9.5 percent of the workforce, over the next four years and closed a few post offices, but he rejected the advice of management consultants to slash personnel and retail outlets more drastically. Instead, he turned the Poste’s small deposit-taking operation, which had fewer than 1 million clients in 1998, into a diversified financial services business selling everything from consumer loans to mutual funds. He trained the Poste’s remaining 165,000 employees in IT and marketing. By the time he left in 2002, the Poste had more than 2.7 million retail banking customers and a net profit of E828.8 million on annual revenues of E7.39 billion.
“There is nothing very glamorous about Passera. His principal quality is doing things effectively but quietly,” says Elserino Piol, who worked with Passera as chief technological strategist and vice chairman at Olivetti and today runs Pino Venture Partners, a Milan-based venture fund. “By never engaging in unnecessary confrontation, a real fault of many managers, Passera gets very tough jobs done -- something he demonstrated at Olivetti and at Poste Italiane.”
Adds Giorgio La Malfa, head of the Finance Committee of the Chamber of Deputies, the upper house of the Italian Parliament, “Passera demonstrated real entrepreneurial courage and flair by transforming a money-losing, bureaucratic postal franchise into an effective and profitable marketer of financial services.”
Much of Passera’s success stems from his ability to marry American-style management training to a keen sense of Italy’s political and social sensibilities. An executive who touts Plato’s Crito dialogue -- in which the condemned Socrates discusses the duties of citizenship with a student -- Passera managed at both Poste Italiane and Intesa to forge a rare bond of trust with unions by persuading them that job cuts for some in the short term were the only route to job security for most in the long run.
“Growth is not only an economic value but a social value,” says Passera. “Unions at Intesa shared the responsibility of a very substantial restructuring plan because their sacrifices were shown to make sense in the light of expected benefits from growth.”
To win the cooperation of unions at Intesa, Passera took a page from his Poste playbook and doubled training for the bank’s remaining 60,000 employees. He also made sure to spread the pain between rank-and-file workers and management by getting rid of 200 senior executives.
“Passera was successful in persuading union representatives that huge labor cuts were necessary,” says Pietro Pisani, general secretary of the banking union Sindacato Autonomo Personale di Credito, Finanza e Assicurazioni. “He still has frequent talks with the unions and is very skillful at avoiding conflicts.”
Passera embarked on the kind of streamlining he had been prevented from carrying out at Intesa’s forerunner in the late ‘90s. He melded the decentralized group’s 20-odd banks into three retail divisions, which today generate 83 percent of group profits, and one wholesale division. The biggest retail division, which carries the Intesa brand, contains the old Ambroveneto, BCI and Cariplo subsidiaries and has 2,184 branches across the country. It accounts for half of the group’s retail profits. A smaller domestic division generates another third of retail profits. It consists of five banks concentrated in northern and central Italy: Banca di Trento e di Bolzano, Banca Popolare Friuladria, Cassa di Risparmio di Biella e Vercelli, Cassa di Risparmio di Parma e Piacenza and Intesa Casse del Centro, an umbrella encompassing seven small local bank brands. Intesa’s third retail group is its Eastern European network.
Over the past two years, Passera’s team has eliminated overlap between the two domestic divisions’ 3,087 branches, slashed the number of IT platforms from ten to three and introduced a standardized product offering. A group that once allowed each of its branch managers to set his or her own prices, resulting in 18,000 different fee schedules, now offers 250 products under a single pricing system. Since January 2004, Intesa has offered only three types of checking account: one for individuals with less than E75,000 in assets, one aimed at affluent customers and one for businesses.
The restructuring helped boost Intesa’s net income sixfold last year, to E1.2 billion, on a modest 4.1 percent rise in revenues to E9.7 billion. The group’s cost-income ratio, a common measure of banking efficiency, has declined to 59.1 percent in the third quarter, bang in line with the European average, from 68.7 percent two years ago.
With the bulk of the cost-cutting under his belt, Passera is looking to grow revenue. In April, Intesa launched an E18 million marketing campaign that is saturating Italian airwaves and newspapers with advertisements promoting a checking account with fees that decrease as clients buy new products, which include mutual funds with low fees, personal loans approved within 48 hours and capped, floating-rate mortgages. His goal: to lift the average number of products bought by Intesa’s 8 million domestic retail clients from slightly less than 2.5 each to nearly three.
The efforts are showing modest signs of success. Intesa’s retail banking revenues increased by 8 percent in the first nine months of this year, to E5.4 billion. Fueling the growth was a 47 percent surge in commissions on new life insurance products, which were introduced in January as part of an exclusive joint venture with Generali, Italy’s biggest insurance company. The bank also recorded a 36 percent jump in commissions on securities products like equity-linked bonds.
Intesa’s Eastern European retail arm includes CentralEuropean International Bank, Hungary’s fourth-largest bank by assets; Vseobecna Uverova Banka, the second-largest bank in Slovakia; and Privedna Banka Zagreb, the No. 2 bank in Croatia. The three banks, bought for E1.5 billion between 1999 and 2001, have 474 branches and 2.5 million customers in some of the fastest-growing banking markets in Europe. The division generated net income of E163 million in the first nine months of this year, or 12 percent of Intesa’s total.
Intesa’s Eastern European network lacks the scale of several of its rivals, however. With net assets of E13 billion, it ranked only sixth in the region through April, according to a Bank Austria Creditanstalt survey, well behind the leader, KBC, which has assets of E25 billion, and No. 2 Erste Bank, with assets of E24 billion. “Intesa clearly has good, profitable banks in Eastern Europe, but without major expansion, the region won’t ever contribute much in the way of significant growth,” says Fondi Anima’s Boglietti.
Hoping to bolster its position, Intesa is looking for acquisitions in areas likely to converge with Western Europe, says Giovanni Boccolini, who heads both the group’s Italian banking division and the foreign division. “In addition to Eastern Europe, we see those markets as Turkey and even North African countries like Tunisia and Morocco,” he says.
Doing deals in those countries isn’t easy, though. In July, Intesa called off negotiations to acquire Istanbul-based Turkiye Garanti Bankasi AS, Turkey’s fourth-largest lender, when the bank’s owner, Dogus Group, demanded an increase in the E300 million price Intesa had provisionally agreed to pay in May. Boccolini plays down the setback. “In any case, we are making a lot of money, and operating costs are very low in the foreign markets where we are present,” he says. “That is giving us the means to expand organically.”
Over the past two years, Intesa has sold its money-losing Sudameris operations in Argentina, Brazil, Chile, Colombia and Uruguay, taking a loss of more than $250 million. The group is likely to sell its only other noncore operation, Banco Weise Sudameris, which lost E39 million in 2003, in the next two years.
In corporate lending Intesa has cut credits to large domestic and foreign businesses by almost 57 percent in the past three years, to E22.9 billion, and increased lending to small and midsize Italian companies, where spreads are bigger and the credit risk is more manageable. “By focusing first of all on our home market and second on the large number of underbanked midsize companies here, we have significantly improved our risk profile,” boasts corporate finance chief Gaetano Micciche.
Passera has also sold the 8.1 percent stake in its own shares that Intesa used to hold and used the proceeds to boost the group’s tier-one capital ratio to 8.6 percent, a level more in keeping with top European banks. Standard & Poor’s recognized the improvement by raising the group’s credit rating back to single-A last July.
Intesa has had less success in reducing nonperforming loans, which amount to 2.8 percent of the bank’s E154 billion loan book. Passera aims to reduce that ratio to 2 percent by the end of this year, a crucial goal if he is to meet his target of boosting earnings per share to between 32 and 35 cents. “I think a securitization and sale of much of its nonperforming loans may be the only way Intesa can come close to its earnings-per-share goal for next year,” says Bank Julius Baer’s Hoffman.
Lending to higher-margin, medium-size companies and households has also helped protect revenues. Intesa registered a 0.5 percent decrease in net interest income in the first nine months of 2004 while its Italian rivals, hurt by shrinking margins on large corporate credits and generally low loan demand, saw average declines of about 5 percent, according to analysts.
In addition to lending, the corporate division also includes a 40 percent stake in the Italian investment banking arm of Lazard. Many bankers questioned the wisdom of the move when Passera agreed in 2002 to pay E86 million for the stake, but the deal has paid off by bringing together the merger expertise of Lazard and its Italian chief, Gerardo Braggiotti, and Intesa’s corporate relationships as Italy’s largest lender. Lazard topped the Italian M&A league table in 2003, advising on 41 deals worth a combined E55.6 billion, compared with a lowly No. 10 ranking in 2002, according to Dealogic. Although merger activity slowed last year, Lazard ranked No. 2 in Italy by advising on almost three dozen deals worth a combined E6.5 billion.
Neither Lazard nor Intesa reveals the income of their joint venture, but both groups maintain that long-term profits will justify Intesa’s investment. The venture has a potential downside for Passera, however. As part of the deal, Intesa also bought a $150 million convertible bond giving the bank the right to 3 percent of Lazard’s worldwide operations. The bond valued Lazard at $5 billion. If chief executive Bruce Wasserstein succeeds in his effort to take Lazard public at the currently mooted price range, which would value the bank at $3 billion to $3.7 billion, Intesa would be forced to write down the value of its bond by as much as $50 million.
After all the difficult restructuring of the past two years, Passera now must demonstrate that his streamlined bank can deliver consistently strong profit growth.
“The best way forward for Intesa is to just do more of the same, which means covering Italy with an efficient, integrated, multibrand approach, either by organic growth or by smaller acquisitions,” Passera contends. “Internationally, it means further developing our retail networks in Central Europe organically and, when possible, by reasonably priced, easily digestible acquisitions.”
That vision is a far cry from Intesa’s tumultuous history, but few investors will complain if Passera delivers.
