September 27, 2018 / 2:17 PM / 8 months ago

Breakingviews - Bolloré’s exit leaves Mediobanca exposed

Vincent Bollore, Chairman of the Supervisory Board of media group Vivendi checks his mobile phone while attending the company's shareholders meeting in Paris, France, April 19, 2018.

MILAN (Reuters Breakingviews) - It suddenly feels like the end of an era in Italian high finance. Financier Vincent Bolloré has unexpectedly quit a shareholder pact that has pulled the strings at Mediobanca – and through it at Italy Inc. – ever since the bank was listed in 1956. The move is a mixed blessing for Chief Executive Alberto Nagel.

The shareholder pact, which controls 28.5 percent of Mediobanca and will be dissolved with Bolloré’s exit, has been a source of controversy. It originally controlled over half of the bank’s shares, in turn retaining influence over many Italian companies. That served as a bulwark against foreign predators, but the pact also became synonymous with cosy deals that favoured insiders – the so-called “salotto buono”. In more recent years, however, the pact’s influence had been waning.

Under Nagel’s stewardship, the bank reduced its stakes in Italian companies to focus on its core banking business, and expanded into commercial banking and wealth management. As a result, Mediobanca shares currently trade at 0.8 times its book value, according to Thomson Reuters I/B/E/S forecasts, above an average of 0.6 for Italian lenders and on a par with best-in-class peer Intesa Sanpaolo. If the pact is not recreated, or re-emerges in a watered-down version, Nagel could have a freer hand to push through his business plan, which for instance includes expanding in wealth management through acquisitions.

But the absence of a dominant investor bloc would also leave Mediobanca more vulnerable to a takeover. Bolloré has said he wants to hold on to his Mediobanca stake, worth 600 million euros. But an exit might appeal at the right price. Vivendi, which Bolloré controls, currently sits on a 2 billion euro paper loss on its stake in Telecom Italia. UniCredit, Mediobanca’s biggest investor with 8.4 percent, considers its stake as a financial investment.

A lean and profitable bank could entice suitors. Mediobanca’s return on tangible equity of 10 percent makes it one of the few Italian banks to cover its cost of capital. It also comes with a bonus: it is the biggest investor in top domestic insurer Generali. Intesa Sanpaolo last year looked at the insurer. If a bidding war starts, it would be a logical white knight.


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