By Silvia Aloisi and Lisa Jucca
MILAN Oct 1 Enrico Cucchiani's ousting from
Italy's biggest retail bank underscores the power of the old
guard in the financial system that critics say holds the economy
Cucchiani, 63, was forced out less than two years into the
job as Intesa Sanpaolo chief executive after clashing with
Giovanni Bazoli, an octogenarian banker who is the mighty head
of the bank's supervisory board.
Cucchiani had also lost the support of the Italian banking
foundations that hold around 25 percent of Intesa's capital. His
departure highlights the enduring influence of these
not-for-profit entities that were set up in the 1990s when the
sector was privatised.
The foundations, which have close ties with local
administrations, are core shareholders in some of Italy's
biggest lenders, including Intesa's rival UniCredit.
Critics say the foundations promote a system of local
control and political patronage that interferes with the way
banks are run, is not market friendly and hurts the economy
which is suffering from the longest recession since the Second
"The foundations are seeking to reassert their control over
Intesa and that is worrying," said Bernardo Bortolotti,
associate professor of economics at the university of Turin.
"It shows the huge fragility of Italian banks, which have a
very weak governance because of the weight of the foundations
and that is a real burden on the industry."
"There were also management issues behind this showdown, and
it would be simplistic to dismiss them. But the rear guard of
Italian politics, banking and capitalism is fighting to the
bitter end, even if the system is falling to pieces."
Insiders say there were several reasons for the boardroom
battle: Cucchiani's solitary management style, his failure to
build his own team at the bank, his attempts to bring in new
investors and his opposition to stretching Intesa's finances to
bail out struggling domestic companies.
But whatever the motive for Cucchiani's exit, analysts and
investors say it leaves Intesa - which earns 80 percent of its
revenues in Italy and holds 100 billion euros ($135 billion) in
domestic government bonds - weakened at a time of political
instability and economic malaise.
"It's a bit disappointing to see him going. He was quite
good in terms of talking to the market, being more open and
shaking up the bank and being more proactive. It's a bit of a
backward step," said a UK-based investor who recently sold
shares in Intesa Sanpaolo because of worries about the Italian
In a brief statement on Monday, Intesa said Cucchiani, who
was ousted in unanimous votes by the bank's two boards, had left
the bank to allow it to reach its full potential. Bazoli,
Cucchiani and the foundations have all declined to comment
publicly on the reasons for his departure.
The foundations say they are stable shareholders that have
helped Italian lenders weather the financial crisis better than
their rivals in southern Europe.
In good times, the foundations have used dividends from the
banks to fund social and cultural projects. But sinking banking
profits have left the foundations' coffers dry at a time when
regulators are telling banks to boost their capital strength.
Europe-wide stress tests next year could force Italian banks
to raise more capital, undermining their ability to act as
corporate power brokers and potentially diluting the
Presenting Intesa's half-year results in August, hit by
soaring provisions for bad loans, Cucchiani surprised many by
making a pitch to potential new shareholders, calling the bank
"an attractive entry point for international investors."
"The foundations clearly did not like that. They want to
maintain the status quo but they don't have the money to inject
new capital, so they fear losing their power," said Carlo
Milani, an economist at think tank Centro Europa Ricerche.
Cucchiani's ousting follows a string of forced departures of
bank managers who clashed with Italian foundations.
In 2010, internationally respected banker Alessandro Profumo
was sacked as UniCredit CEO after a row with that bank's
foundations over the need to reach out to foreign investors.
Now he is chairman of Banca Monte dei Paschi di Siena
, the scandal-hit Tuscan lender, whose top investor is
also a banking foundation and which is seeking to avert
nationalisation with a 2.5 billion euro capital increase.
Matteo Arpe, a former CEO of Capitalia, was also shown the
door in 2007 after resisting a forced merger with UniCredit
meant to shield the Rome-based bank from foreign predators.
Cucchiani's exit came just after a deal last week to
increase the grip of Spain's Telefonica over telecoms
group Telecom Italia's, in which Intesa has a stake.
Loss-making flagship carrier Alitalia - which Cucchiani's
predecessor Corrado Passera helped rescue in 2008 - is also at
risk of falling into foreign hands for lack of cash.
Both developments are a sign of the times. The protracted
recession is forcing Italian banks to cut some of their ties
with pressured domestic companies.
Even investment bank Mediobanca, long the kingpin
of Italy's corporate world through a web of cross-shareholdings,
has announced it will sell some stakes.
Critics of Cucchiani inside the bank say the manager, who
came from the insurance sector, did not gel with front-line
managers, lacked retail banking experience and failed to come up
with an effective strategy to weather Italy's recession.
Despite professing a pro-market creed, Cucchiani did back
some old-style Italian transactions, like the buyout of Camfin
, the holding controlling tyre-maker Pirelli,
the price of which was criticised by market regulator Consob.
But his successor - insider Carlo Messina - may find it
harder to keep Intesa out of deals where politics and personal
relationships can count more than business.
Analysts at Mediobanca Securities said Cucchiani's departure
leaves Intesa exposed to pressures to use its large balance
sheet for "unwelcome" domestic rescues.
Intesa last week denied market talk that it might step in to
save Monte dei Paschi. Cucchiani had said in September he did
not want to invest in Italian banks.