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Matteo Renzi, Italy’s prime minister, is planning to extend his reformist agenda into Italian business and finance as he seeks a more aggressive mandate for the country’s €400bn sovereign wealth fund in an effort to spur growth and create jobs.
The move by Mr Renzi comes as Italy’s economy showed signs of growth in the first quarter after a three-year recession, buoyed by lower oil prices, a weaker euro and an European Central Bank €60bn-a-month quantitative easing programme. There are also signs structural reform and an increase in foreign investment are starting to have an impact.
But Italy’s banks remain bloated with an estimated €330bn worth of bad loans and weakened small and medium-sized companies, weighing on chances of a sustained recovery.
Against this backdrop, Mr Renzi has sought to wrench control of the treasury-controlled Cassa Depositi e Prestiti, which is funded by postal savings but also issues securities, and use it to stimulate the economy along the lines of France’s state fund Caisse des Dépots.
“Italy finds itself at a decisive moment for recovery,” Mr Renzi said last week after days of backroom haggling over the planned changes which have faced fierce opposition among government bureaucrats in Rome. “Strengthening the role of the CDP is crucial”.
Key to Mr Renzi’s plan to overhaul the Rome-based CDP is the appointment of two Italian bankers with extensive experience of international finance to the fund’s top jobs.
In a move that echoes the appointment of former Goldman Sachs chief economist Jim O’Neill as the UK’s commercial secretary at the treasury, Mr Renzi is pressing for the appointment of Claudio Costamagna, 59, former co-head of Goldman Sachs Europe and chairman of construction company Salini Impregilo to become chairman of CDP before the summer is out.
Meanwhile, Fabio Gallia, 51, an executive board member of BNP Paribas and chief executive of the French bank’s Italian operation, has been tapped to be CEO, according to officials.
The two men will be given the task of using the fund to further boost funding to the real economy and encourage foreign direct investment.
CDP is 80 per cent owned by Italy’s treasury with the rest owned by Italian banking foundations. It was turned into a joint stock company under Silvio Berlusconi and given a mission to invest via two funds in infrastructure and Italian small and midsized companies that make up the country’s economic backbone.
However, critics have said its role as a tool of industrial policy in Italy has been inconsistent and weak. Last year CDP’s private equity fund criticised for making a €80m investment in Rocco Forte hotels, giving it 20 per cent ownership of the London-based group.
Andrea Guerra, a special adviser to Mr Renzi who was formerly CEO of eyewear multinational Luxottica, said: “Today we [the Italian economy] are starting to grow and if we want this growth to continue we need to make a few things happen. We need to promote existing industries and new industries. To be more proactive with infrastructure investment and in the support of exports.”