“There was a lot of talk about gossip because there was nothing concrete. Hypotheses are like shadows, whose contours are unknown. In the end there was nothing”. The "shadows" mentioned by Francesco Gaetano Caltagirone, a large shareholder of the Lion of Trieste, concern the two Mancati Sposi, Generali and Intesa San Paolo, both today in discussions with the shareholders, less than three months after the end of an engagement that, in reality, never happened. Even if Generali, perhaps due to an excess of self-defense, has shown that it gives credit to the "shadows" by purchasing 3 percent of the bank's capital.
But now? Thanks to a favorable stock market season, the two players in Italian finance, the only ones (together with Unicredit) able to play a significant role in the European map of the sector, seem to be in good health. But the reasons that a few months ago argued in favor of a possible merger have certainly not disappeared.
The top management of Intesa are very clear that the bank is at a crossroads: either it grows, focusing on wealth management or it risks becoming the prey itself. Today more than yesterday, given the revival of interest in the Italian market, as emerges from the very recent study by Mediobanca: "Systematic risks have by now been mostly addressed - reads the analysis - valuations are low, the elections French companies have reduced political risks and are a catalyst for attracting investment in the sector”. In addition there are "expectations of rising rates and the European economy which is showing signs of vitality".
Finally, on the front of non-performing loans, the situation is improving, to the point that the president Gian Mario Gros-Pietro was able to proudly declare that “we have no intention of giving away the underlying values of the credits to specialized operators or even damaging the debtor companies with hasty operations. We count on the one hand on the professionalism of our operators, on the other on the good health of the production system. Our goal is to extract as much value as possible.”
In this context, it is important for the bank led by Carlo Messina, successfully engaged so far to avoid new Italian misfortunes (another bloodletting for Alitalia, new funds for Atlante and so on). accelerate growth through acquisitions, especially in asset management and private banking, the most promising sectors and closest to the bank.
But in Italy, with the Generali hypothesis vanishing, prey is scarce. Meanwhile, the title continues to attract interest among professionals. Here, for example, is the opinion of Crédit Suisse: “Intesa remains the financial stock of choice in southern Europe thanks to the solidity of its capital ratios, the good dividend yield offered to shareholders, a strong presence in the asset management market and a favorable positioning in the current reflationary environment”. A good report card but also a temptation: where do you find another prey like this?
Meanwhile, from the Lion's headquarters, Philippe Donnet continues to repeat that Generali is and intends to remain "an independent Italian company". For his part, the CEO who comes from Corsica can show off a very good technical performance: an improving combined ratio to 92,5% and a Solvency II rating of 194% plus growing profitability capable of making possible the objective of distributing shareholders 5 billion in the form of coupons.
Today Philippe Donnet, who on the eve of the shareholders' meeting received the confirmation of the A- rating from Fitch, will take stock of the state of the art, starting from cost cutting (200 million), and from the closure of international offices which do not present promising business prospects. Brilliant signals supported by a young and highly motivated team: 21 of the company's 74 employees are under 34. The leading managers of the new generation have emerged from their ranks: from Marco Sesana, born in 1973, CEO of Generali Italia and Country Manager Italy since 1 January 2017 to the new CEO of Banca Generali Gian Maria Mossa, only 42 years old but with solid experience at shoulders in international groups.
The scrum package, to use an expression dear to Donnet, a former rugby player, is there. But the rest? It's no mystery that the expansion of Generali in recent years has been held back by the difficulty of the main shareholders, starting with Mediobanca, to support a possible capital increase at the service of growth both on markets already covered and on new markets. A dangerous bond, because it exposes Leo to the aims of more solid and aggressive competitors. In recent months, in parallel with the attentions of Intesa, the rumors on the interest of Allianz, Axa or Zurich have multiplied.
It is in light of this situation that the recent statements to Corriere della Sera by President Gabriele Galateri should be read. We do not feel prey, he stressed, adding that "we are not worried about it". If anything, there is room to strengthen stable shareholders. “If a foreign fund were added tomorrow, it would be welcome".
What about a capital increase? “Our logic is simple: do you have a project? Call a meeting. If an opportunity for growth arises, the shareholders will not fail to give us their support”. Including Mediobanca which also plans, in its business plan, to reduce its stake to 10% but the drop could even be stronger, if Generali had the opportunity to accelerate the growth strategy in new geographic areas and sectors. In short, bring it on: Leo can be a good partner. Let's hope it's not prey.
