Italy's Mediobanca kicks off business review process

MILAN Mon Nov 19, 2012 7:05pm EST

MILAN Nov 19 (Reuters) - Italy's top investment bank, Mediobanca, is set to kick-start a review process that will culminate in a new business plan next year.

It is likely to shift the focus of the bank to core business practices and foreign growth to boost profits.

The review, which will be discussed officially for the first time at a board meeting on Tuesday, should also address the issue of downsizing the bank's investment holdings.

"The board will have a first exchange of views to discuss in which direction the bank should go," a source close to the situation said on Monday, adding the final plan would be ready for presentation next June.

Mediobanca, the main shareholder in Italy's top insurer, Assicurazioni Generali, has long been at the crossroads of Italian finance through a web of influential cross-shareholdings, which has allowed it to wield power.

But Italy's deep economic crisis and an unstable political situation have forced the bank to rethink its future.

Chief Executive Alberto Nagel told shareholders in October he would seek to reduce the bank's exposure to equity holdings to reduce earnings volatility.

Aside from a 13.2 percent stake in Generali, the bank holds large stakes in publisher RCS Mediagroup and in the holding that controls telecoms operator Telecom Italia .

Write-downs on some of the holdings undermined Mediobanca's net profits for the financial year ending June.

Former Generali CEO Giovanni Perissonotto was ousted from his position earlier this year after Mediobanca and private investors, including Luxottica founder Leonardo Del Vecchio, objected to the group's share performance.

Nagel, who has headed the bank since 2007, has been trying to widen its geographical footprint, which for some investors has become too domestic in a fast globalising world.

Under his leadership the bank expanded into France, Germany, Spain and Britain but sources close to the bank have lamented its absence from Asia and its undersized U.S. presence.

Foreign revenue represents 30 percent of the investment banking business and 20 percent of its loan book.

The review is also expected to focus attention on retail unit Che Banca! which, together with retail bonds, covers around 60 percent of the bank's funding.

Che Banca! allowed Mediobanca to survive a shutdown of the euro zone wholesale banking market last year. (Reporting by Stephen Jewkes and Lisa Jucca; Editing by Dan Grebler)

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