REFILE-UPDATE 1-Mediobanca breaks with past in strategy rethink

Fri Jun 21, 2013 2:59am EDT

(Corrects date to June 21, edits headline, with no other changes to text)

* Bank to cut equity exposure by 2 bln euros

* Writedowns of 400 mln euros to push it into the red

* Will cut Generali stake by 3 pct, exit other holdings

* Targets ROE of 10-11 pct by 2016

By Gianluca Semeraro

MILAN, June 21 (Reuters) - Investment bank Mediobanca turned its back on half a century of dominance over some of Italy's biggest corporate names by agreeing to sell nearly all its strategic stakes, a move that will push it into the red this year.

In a new business plan unveiled on Friday, the bank said it aimed to cut by 2 billion euros ($2.64 billion) its exposure to equity holdings through sales and writedowns to focus on its core banking operations.

It will reduce by 3 percent its 13.2 percent stake in Italy's largest insurer Generali but sell other strategic holdings.

Milan-based Mediobanca plans to immediately book writedowns of 400 million euros to bring key holdings to market value and pave the way for their sale, a move that will result in a loss of around 200 million euros for the current financial year ending June 30.

Under the 2014-2016 business plan, the bank targets a return on equity of 10-11 percent by 2016 and aims to keep its core Tier 1 ratio, a measures of financial strength, at 11-12 percent. It aims to keep dividend payout at 40 percent.

Funded in the aftermath of World War Two by legendary banker Enrico Cuccia, Mediobanca, which sits at the centre of a web of complex cross-shareholdings, has been instrumental in shaping Italy's business landscape by wielding influence through stakes in a raft of major companies.

Among others, the bank owns Generali, leading domestic publisher RCS Mediagroup, owner of influential newspaper Corriere della Sera, and corporate holding Telco, the top investor in domestic phone giant Telecom Italia.

But a severe drop in the value of these stakes due to a deep economic crisis in Italy has led current management to squarely focus the bank's future strategy on value rather than political influence.

A source with direct knowledge of the strategic thinking at the bank said Mediobanca plans to exit shareholders' pacts at Telco and RCS as the earliest opportunity in September. ($1 = 0.7590 euros) (Reporting by Gianluca Semeraro, writing by Lisa Jucca; Editing by David Cowell)

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