* Bank to cut equity exposure by 2 bln euros
* Writedowns of 400 mln euros to push it into the red
* Will sell 3 pct of Generali, exit other holdings
* Shares down 6 pct, analysts say targets are ambitious
(Recasts with quotes from Nagel)
By Gianluca Semeraro and Lisa Jucca
MILAN, June 21 Mediobanca, under
pressure to improve returns for shareholders, plans to sell
almost all of its large stakes in major companies, ending half a
century of playing kingmaker to Italy's corporate world to focus
The bank's Chief Executive Alberto Nagel said on Friday
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.
Italy's economic crisis and the introduction of new bank
capital rules that make it costly to hold unprofitable
investments have forced Mediobanca to relinquish control.
"It's a natural evolution pushed by new banking rules and
also by the euro crisis," Nagel said. "Having a large exposure
to equities in southern Europe means today denting profitability
and exposing (the bank) to high volatility," the CEO said as he
unveiled the firm's 2014-2016 business plan.
"Had we had a portfolio of high-performing U.S. investments,
the pressure would have been minimal."
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.
Nagel said Mediobanca, which owns 13.2 percent of Generali
, wanted to sell 3 percent of Italy's largest insurer
once Generali's reorganisation was at a more advanced stage. But
the bank is ready to sell all other strategic holdings.
The Milan-based group plans immediately to book writedowns
of 400 million euros 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 euros for the financial year ending
Besides its core investment banking business, Mediobanca
wants to increase the weight of its retail bank, a source of
much-needed liquidity, and its lucrative corporate finance arm.
It also launched a new alternative asset management platform
on Friday and said it would increase its foreign presence.
The bank will aim for a return on equity of 10-11 percent by
2016, a core Tier 1 ratio, a measure of financial strength, of
11-12 percent and a dividend payout at 40 percent of earnings.
Mediobanca shares, however, took a beating, falling as much
as 6.5 percent. Analysts said the market reaction showed some
concerns that the plan was too ambitious.
Nagel said: "Our shares have overperformed ahead of the
plan. We must give brokers the time to assess it. This will take
1-2 weeks. Today it's a case of buy on rumours, sell on news."
VALUE OVER INFLUENCE
Mediobanca played an important role in helping Italy to
develop an independent corporate sector after World War II.
But over time, the bank's name became linked with Italy's
boardroom elites and opaque dealmaking carried out in its
'salotto buono', a closed boardroom circle which local
businessmen strived to be part of. The 'weight', or influence,
of an investment rather than its financial value was the guiding
star of Cuccia and his immediate successors.
Nagel said that world was long gone and the bank did not
want to prolong a business model based on minority stakes.
"The existence of the 'salotto buono' has generated a
control structure that has not helped the development of these
companies," said Roberto Lottici, fund manager at Ifigest.
"In principle, Mediobanca's change of strategy is to be
welcomed even if, at this point in time, it may render some of
these companies vulnerable."
Besides Generali, Mediobanca's biggest holdings include
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.
Mediobanca has never recouped its initial investment in
Telco, currently trading near historic lows, while debt-laden
RCS is in the middle of a rights issue.
The bank plans to exit shareholders' pacts at Telco and RCS
as the earliest opportunity, possibly already in September.
($1 = 0.7590 euros)
(Editing by Jane Merriman)