Banca Intesa SpA

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Banca Intesa SpA

Piazza Paolo Ferrari, 10
20121 Milan
Italy
Telephone: +39 02 88441
Fax: +39 02 8844 3638
Web site: http://www.bancaintesa.it

Public Company
Incorporated: 2001
Employees: 60,000
Total Assets: EUR 260.21 billion ($320 billion) (2003)
Stock Exchanges: Borsa Italiana
Ticker Symbol: BIN
NAIC: 522293 International Trade Financing

Banca Intesa SpA has merged its way into the position of Italy's top commercial bank, with total assets topping EUR 260 billion ($320 billion), and a network of more than 3,700 branches throughout the country. Intesa is also one of Italy's most international banks, operating nearly 650 branch offices in some 40 countries worldwide. Nonetheless, into the mid-2000s, Intesa has been refocusing its operations onto the domestic market, and has exited a number of foreign markets, including most of its South American holdings. The company also is exiting France, Germany, and Canada, and is considering an exit from the Eastern European market as well. Intesa was formed from a two-phase merger in the late 1990s—the first phase involved Banco Ambrosiano Veneto and CARIPLO, the world's largest savings bank. Renamed Banca Intesa, the bank next merged with Banca Commerciale Italiana (BCI), a process completed in 2001. In addition to a full range of commercial and consumer banking services, Intesa also operates brokerage services through subsidiary Caboto, as well as assets management and other financial products including mutual funds, mortgage, and leasing, and, through subsidiary Caravita, bancassurance products. Leading Intesa's "cleanup" is CEO Corrado Passera, who joined the company after revitalizing Italy's notoriously ailing postal system. Banca Intesa is listed on the Borsa Italiana.

Forming a National Contender in the 1990s

Banca Intesa was formed in the late 1990s from the merger between two mid-sized banks, Banco Ambrosiano Veneto and CARIPLO, which was then the world's largest savings bank, creating Banca Intesa, which then merged with another midsized player, Banca Commerciale Italiana to form IntesaBCI. The resulting group instantly claimed the number one position in the Italian banking sector, and became one of the top banking groups in Europe, with operations in more than 40 countries and total assets of more than EUR 250 billion ($300 billion).

The oldest part of the later Banca Intesa was the savings bank CARIPLO. Like many of Italy's banks, CARIPLO originated as part of a charitable association, with the founding of the Central Charity Commission (CCC) in Italy's Lombardy region in 1816. That association acted in two capacities, on the one hand raising funds through charitable donations, and on the other by providing financial assistance and other funding initiatives. The CCC quickly amassed a large assets base, and in 1823 used those as the foundation for the establishment of its own savings bank, patterned after the banking model pioneered by the Wien Sparkasse in Vienna. The new savings bank was named Cassa di Risparmio di Milano. The bank gradually expanded throughout the region, and later changed its name to Cassa di Risparmio delle Province Lombarde, or CARIPLO.

CARIPLO added mortgage services in 1864, which operated independently of the main bank until the beginning of the 1990s. In the 1920s, CARIPLO began lending to farmers, establishing another independent unit, the Agricultural Credit Section. Following World War II, CARIPLO played a major role in Italy's reconstruction effort. At this time, the savings bank began providing medium-term loans, primarily to small to mid-sized businesses, through a new subsidiary, Mediocredito Lombardo. The bank also provided financing for the public works and construction sector, adding a separate business unit for this operation as well.

By the end of the 1980s, CARIPLO had grown into a full-fledged commercial bank with operations throughout Italy. An important part of the group's transition to a nationally and internationally operating bank came with its acquisition of Istituto Bancario Italiano, or IBI, in 1982. In 1991, CARIPLO—which remained a public sector bank owned by local and regional governments—converted to joint-stock status, and IBI and its other business units were then merged into a single entity, CARIPLO SpA. This move set the stage for CARIPLO to join the massive consolidation of the Italian banking sector during that decade.

Other parts of the later Banca Intesa stemmed from the end of the 19th century. The Banco Ambrosiano was created in Milan as a joint-stock bank in 1896 by a group of Lombardi Catholics. The bank grew into a mid-sized, regional player by the 1920s. In the postwar period, Ambrosiano began a long period of expansion, enabling it to emerge as one of Italy's—and even the world's—top banks. Driving the group's growth was Roberto Calvi, who joined the bank at the age of 27 in 1947 and worked his way up to become its director general. After building the bank through organic growth into the 1970s, Calvi launched Ambrosiano on an acquisition effort, acquiring Banco di Imperia in Imperia and Banca Mobiliare Piemontese in Turin in 1977.

Calvi steered Ambrosiano into a close relationship with the Vatican—indeed, Calvi himself earned the nickname as "The Banker of God." Yet Calvi's complex dealings were to lead him and Ambrosiano to ruin. In 1981, Ambrosiano suddenly found itself bankrupt, with debts as high as $1.5 billion. Calvi himself was convicted of currency trading violations in 1981. Calvi, a member of the secretive P2 masonic lodge, was later suspected of having funneled off Ambrosiano's funds through the Vatican's own bank, Istituto per le Opere Religiose (IOR), for various illegal schemes. Before he could be jailed, however, Calvi fled from Italy, and ultimately reached London. In 1982, Calvi's body was discovered hanging under the Blackfriar's bridge—a prominent landmark in freemasonry—with his pockets filled with bricks and stones. Despite the evidence to the contrary, Calvi's death was ruled a suicide, a ruling that was overturned only in 2002, with three suspects held on murder charges.

Giovanni Bazoli was appointed by the Bank of Italy to take over the failed Ambrosiano. Bazoli initiated a dramatic restructuring plan, which included a name change—to Nuovo Banco Ambrosiano—to emphasize its commitment to emerging from the Vatican scandal. Under Bazoli, Ambrosiano grew strongly through the 1980s. The successful rebuilding of Ambrosiano led Bazoli to begin planning for the next phase in the bank's development. With hundreds of small, undercapitalized banks, the Italian banking industry seemed ill-prepared for the lowering of trade barriers among European Community members in the 1990s. Bazoli recognized the need to force the consolidation of the Italian banking sector, and foster the emergence of a smaller number of larger banks capable of competing on a European and even global level. As a first step, Bazoli led Ambrosiano into its first major merger—with Banca Cattolica del Veneto.

That bank had originated as Banca Cattolica Vicentina as a cooperative bank serving the Catholic community in 1892. Vincentina reincorporated as a joint-stock company in 1916, then grew into a prominent regional bank. Vincentina came to the rescue of a number of smaller banks in its region during the Italian banking crisis of the 1930s—which led the Italian government to take over the country's top 24 banks—and then changed its name to Banca Cattolica del Veneto. Following World War II, Banca Cattolica del Veneto came under the control of the Vatican's IOR and began a steady expansion, backed by the region's own strong economic growth. At the time of its merger with Ambrosiano, the Veneto bank was considered a fast-growing, well-managed, and profitable bank.

The newly merged bank adopted the name of Banco Ambrosiano Veneto, and, under Bazoli's stewardship, began a series of mergers and acquisitions through the 1990s. Among these were the Banca Vallone, based in Galatina, in 1991, followed by the 1992 purchase of Citibank Italia, based in Naples, which formed the basis of the group's Banco Ambroveneto Sud branch. Ambrosiano Veneto continued to look for growth opportunities, and particularly national expansion. In 1994, the group acquired Società di Banche Siciliane, followed by Banca di Trento e Bolzano, and, in 1995, Banca Massicana di Sessa Aurunca. The company also had added brokerage operations through its acquisition of Caboto in 1992.

Ambrosiano Veneto's rapid growth was matched by sound financial health. As it entered the second half of the 1990s, the bank was recognized as Italy's most profitable private-sector bank. The bank remained nonetheless a relatively minor player in the European market, and even at home as well. By the middle of the decade, Ambrosiano Veneto had itself become the object of a number of takeover attempts, including from Mediobanca and Banco Commerciale Italiano. Although it had defeated the attempts, the bank remained vulnerable. To remedy this, Ambrosiano Veneto prepared the next phase of its development into Banca Intesa.

Italian Banking Powerhouse in the New Century

In 1997, Ambrosiano Veneto announced that it had entered merger talks with CARIPLO, outpacing BCI's own attempts to form a merger with Italy's largest savings bank. CARIPLO and Ambrosiano Veneto quickly reached an agreement to merge, forming Banca Intesa in 1998. The new bank now became Italy's largest private-sector bank, with more than 1,800 branches and over $150 billion in assets.

Soon after the merger, Intesa turned the tables on BCI, acquiring a stake in the recently privatized bank. By 1999, Intesa raised its stake in BCI to 70 percent, in what was described at the time as a friendly merger—although that had been strongly "encouraged" by the Bank of Italy. The bank then changed its name, briefly, to IntesaBCI, and began work converting BCI into its investment and corporate banking division. Originally BCI was to remain an independently operating part of the large Intesa, but by 2000, Intesa acquired full control of BCI, which was then absorbed into the group's overall operations.

Company Perspectives:

Banca Intesa is the leading Italian banking group and one of the protagonists in the European financial arena.

Yet the mergers that had built Banca Intesa appeared to be mergers only in name—by as late as 2002, the bank appeared unable to integrate its various pieces, which remained jealously controlled by their former heads, in a co-CEO setup, leading to what the Financial Times described as "vicious infighting among the senior ranks." In March of that year, however, the bank moved to simplify its management structure, naming Corrada Passera as its sole CEO.

Passera had already earned a reputation as a "cleanup man" by leading the resurrection of Italy's decrepit postal system. Passera set to work streamlining and revitalizing the bank, which re-adopted the name Banca Intesa in mid-2002. Under Passera, the bank shed some 5,000 employees, including 200 senior managers, in part in an effort to develop a single, unified corporate culture.

Passera next targeted the bank's widespread, and widely unprofitable, geographical focus. In 2003, the bank began exiting a number of its foreign markets, selling off its Latin American operations. The company continued its pruning effort, selling its subsidiaries in France and Germany as well as other European holdings. In 2004, Intesa approached the end of its cleanup drive, announcing its agreement to sell its Canadian operations to HSBC Bank Canada, and its subsidiary in Uruguay to Banco ACAC Crédit Agricole. In a related move, Intesa agreed to sell 50 percent of its Intesa Vita insurance subsidiary to Generali in December 2003.

By 2004, Intesa's efforts had started to take hold, as the company's revenues rebounded and began to show steady growth. With rising sales and profits, Intesa once again began eyeing external expansion. Part of the group's future strategy involved the strengthening of its partnership with France's Crédit Agricole, which, with a 15 percent stake, remained Intesa's largest shareholder. The partnership called for the provision of combined services through Intesa's network in Italy and through Crédit Agricole's strong international network. Meanwhile, Intesa began looking for its own growth opportunities. In March 2004, the group took a new step into international markets when it acquired controlling interest in Turkey's Garanti Bank. Banca Intesa had successfully negotiated the Italian banking industry consolidation, and its own merger process, to claim a position among the world's top banks.

Principal Subsidiaries

Banca Cis S.p.A.; Banca Di Trento E Bolzano S.p.A.; Banca Intesa France S.A.; Banca Popolare Friuladria S.p.A.; Banco Comercial E De Investimento Sudameris S.A.; Banco Sudameris Argentina S.A.; Banco Sudameris Colombia S.A.; Banco Sudameris De Investimento S.A. (Brazil); Bankhaus Löbbecke & Co. Kg (Germany); Banque Sudameris S.A. (France); Caboto Sim S.p.A.; Caridata S.p.A.; Cassa Di Risparmio Della Provincia Di Viterbo S.p.A.; Cassa Di Risparmio Di Ascoli Piceno S.p.A. (Carisap); Cassa Di Risparmio Di Biella E Vercelli S.p.A. (Biverbanca); Cassa Di Risparmio Di Citta' Di Castello S.p.A.; Cassa Di Risparmio Di Foligno S.p.A.; Cassa Di Risparmio Di Parma E Piacenza S.p.A.; Cassa Di Risparmio Di Rieti S.p.A.; Cassa Di Risparmio Di Spoleto S.p.A.; Central-European International Bank Ltd. (Hungary); Comit Investment (Ireland) Ltd.; E.Tr. - Esazione Tributi S.p.A.; Esatri Esazione Tributi S.p.A.; Fundsworld Financial Services Ltd.; Intesa Bank Ireland Plc; Intesa Bank Overseas Ltd.; Intesa E.Lab S.p.A.; Intesa Fiduciaria Sim S.p.A.; Intesa Gestione Crediti SpA; Intesa Holding Centro S.p.A.; Intesa Holding International S.A.; Intesa Immobiliare S.p.A.; Intesa Leasing S.p.A.; Intesa Mediocredito SpA; Intesa Preferred Capital Company L.L.C. USA; Intesa Renting S.p.A.; Intesa Riscossione Tributi S.p.A.; Intesa Sec. Npl SpA; Intesa Sec. Npl SpA; Intesa Sistemi E Servizi S.p.A.; Intesabank Canada; Intesatrade Sim S.p.A.; La Centrale Consulenza S.p.A.; Magazzini Generali Cariplo S.p.A.; Mediofactoring S.p.A.; Nextra Alternative Investments Sgr S.p.A.; Nextra Investment Management Sgr S.p.A.; Phönix Kg (Germany); Privredna Banka Zagreb D.D. (Croatia); S.Es.I.T. Puglia - Servizio Esazione Imposte E Tributi S.p.A.; Setefi S.p.A.; Societa' Italiana Di Revisione E Fiduciaria S.I.R.E.F. S.p.A.; Vseobcna Uverova Banka (Vub) (Slovak Republic).

Key Dates:

1816:: Central Charity Committee (CCC) is founded.
1823:: CCC uses assets from charity to launch a savings bank, Cassa di Risparmio di Milano, which evolves into Cassa di Risparmio delle Provincie Lombarde, or CARIPLO.
1892:: Banca Cattolica del Veneto, which develops into a major regional bank during the banking crisis of the 1930s, is founded.
1894:: Banca Commerciale Italiana (BCI) is founded.
1896:: Banco Ambrosiano in Veneto is founded.
1947:: The Vatican Bank acquires control of Banca Cattolica del Veneto.
1978:: Ambrosiano acquires Banco di Imperia in Imperia and Banca Mobiliare Piemontese in Turin.
1982:: Ambrosiano goes bankrupt and is reformed as Banco Nuovo Ambrosiano.
1989:: Ambrosiano and Cattolica del Veneto merge, forming Banco Ambrosiano Veneto (BAV).
1991:: BAV acquires Banca Vallone, based in Galatina.
1992:: BAV acquires Caboto, then Citibank Italia, based in Naples.
1994:: BAV acquires Società di Banche Siciliane and Banca di Trento e Bolzano.
1995:: BAV acquires Banca Massicana di Sessa Aurunca.
1998:: BAV and CARIPLO merge, forming Banca Intesa.
1999:: Banca Intesa acquires 70 percent stake in BCI.
2000:: Banca Intesa acquires full control of BCI, and becomes IntesaBCI.
2002:: IntesaBCI is renamed Banca Intesa and begins a restructuring effort, shedding 5,000 jobs and its subsidiaries in Latin America, France, Germany, and Switzerland.
2003:: Banca Intesa sells 50 percent of the Intesa Vita insurance subsidiary to Generali.
2004:: Banca Intesa sells its Canadian operations to HSBC Canada; a controlling stake in Turkey's Garanti Bank is acquired.

Principal Competitors

Sanpaolo IMI S.p.A.; Banca d'Italia; Banca Monte Parma S.p.A.; Banca Monte Dei Paschi di Siena S.p.A.; Banca Nazionale del Lavoro S.p.A.; Banca di Roma S.p.A.; Banco Popolare di Verona e Novara.