Intesa SP could scrap Fideuram sale, go for IPO

MILAN (Reuters) - Italy's biggest retail bank Intesa Sanpaolo SpA ISP.MI could be tempted to scrap trying to sell fund manager Banca Fideuram and list it instead, with analysts valuing it at 2.5 billion to 3.5 billion euros ($5.25 billion).

Exor SpA EXOR.MI, the holding company for Italy's Agnelli family, says it is interested in Fideuram. But Exor, the main shareholder in automaker Fiat SpA FIA.MI, has only a billion euros in cash and the Bank of Italy frowns on banks being bought using debt. Talks are making slow progress.

That could mean the option of an initial public offering (IPO) gains traction for Intesa Sanpaolo, with a listing most likely in the first part of next year in order to take advantage of positive markets, a banking source and an analyst said.

Shedding Fideuram, a leading Italian asset manager with 4,300 private bankers, is part of Chief Executive Corrado Passera’s program to get rid of about 11 billion euros of non-core assets and bolster capital ratios. They are now toward the low end among large European banks.

The bank snubbed state aid aimed at boosting its capital ratios last month and issued a 1.5 billion euro hybrid bond.

“With the markets currently very positive, an IPO for Fideuram probably gets more likely every day,” said an investment banker specializing in Italian banks.

“An IPO takes a while to prepare. They could be planning now for launching early-mid next year.”

A source close to the deal said the bank “has been looking at an IPO from the beginning.”

A financial source also said Intesa Sanpaolo was keeping all its options open, with no determination yet on how much of Fideuram could be sold or listed.

“However, an IPO would in theory let them free themselves up on the balance sheet and deconsolidate Fideuram,” said the source.

In calculating the impact on Core Tier 1 ratio -- a standard of capital held against risky assets -- the capital gain should be looked at along with deconsolidation of intangibles, such as goodwill, and risk-weighted assets.

A Fideuram IPO also could benefit from investors' renewed enthusiasm for asset managers, with the Standard & Poor's Asset Management and Custody Banks Index .GSPAMCB rising 112 percent since March.

In a September IPO, Switzerland's Julius Baer BAER1.VX raised more funds than expected when it floated its U.S. asset management arm Artio Global Investors Inc ART.N. Artio had assets under management of $53 billion at the end of August and raised $650 million in selling 25 million shares.

Private banks also are in the mood for mergers as they look to gain crucial size and cut costs in the wake of the credit crisis. In one takeover, Julius Baer agreed to buy ING's ING.AS Swiss private banking assets for 520 million Swiss francs ($516.4 million) last month.


Listing Banca Fideuram, with its 42.3 billion euros in assets under management at the end of June, also would be a big icebreaker for Italian IPOs.

The financial crisis has frozen the market, with no Italian listings since the third quarter of last year. Europe overall has had just 32 IPOs this year worth almost a billion euros, according to Reuters data.

An analyst said Exor could try to buy 51 percent of Fideuram but then would have the problem of taking on minority partners or potential shareholders.

“That’s not easy at the moment. Therefore the alternative of doing the Fideuram IPO is increasingly gathering momentum,” said the analyst, who spoke on condition of anonymity.

Although Italian newspapers have reported Intesa Sanpaolo and Exor are talking, the bank has said only that Fideuram is among assets set aside for sale, listing or partnership.

Passera told reporters on Wednesday there was nothing to add about Fideuram. An Exor spokesman said Fideuram was still one of the options it was examining.

Fideuram had been headed for an IPO as part of Sanpaolo IMI’s Eurizon unit in 2006. However, Banca Intesa’s takeover of Sanpaolo IMI that year in the deal that created Intesa Sanpaolo scuppered Eurizon’s listing plans.

Selling 80 percent of Fideuram at a valuation of 3 billion euros would hike Intesa Sanpaolo’s Core Tier 1 ratio -- a standard of capital held against risky assets -- by 59 basis points, Deutsche Bank has estimated.

The bank’s Core Tier 1 ratio was 6.9 percent at the end of June. Selling off all the non-core assets earmarked by Passera will boost capital ratios by 200 basis points, the bank said last month.

Additional reporting by Jo Winterbottom and Tiziana Barghini; Editing by Jon Loades-Carter