Intesa Sanpaolo stays tight-lipped on Generali bid

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Intesa Sanpaolo has reported a 13.6 per cent increase in full-year profits to €3.1bn after the Italian bank kept investors guessing by saying a potential takeover bid for the insurer Generali remains “only the subject of a case study”.

Italy’s largest bank by assets confirmed last week that it was weighing a bid for the country’s largest insurer Generali, sending shockwaves through Italy’s tight-knit financial community.

Carlo Messina, Intesa’s chief executive, said today:

We are players in the European context, ready to seize growth opportunities on condition that we maintain unchanged our ability to significantly reward our shareholders and our capital strength, which remains a crucial competitive advantage.

The mooted deal, if successful, would reshape Italian finance, creating a financial colossus in Italy with a combined market value of €60bn, dwarfing Intesa’s nearest bank rival UniCredit.

The bank said in a short statement on Friday morning that “possible industrial combinations with Assicurazioni Generali continue to be only the subject of a case study, which is part of the various analyses that the bank’s management regularly carries out about the group’s options for growth, both internal and external”.

Shares in Intesa have fallen 10 per cent since news of the potential deal first surfaced last week, partly on fears that it could affect the bank’s dividend.

The bank said that in 2017 it aimed to achieve “an increase in operating margin, driven by revenue growth and continuous cost management, and in gross income with a reduction in the cost of risk”.

It announced an annual dividend of €17.8 cents per share and stuck by its commitment to distribute €10bn of total cash dividends over the four years to 2017.

The eurozone’s negative interest rates squeezed the bank’s net interest income – the difference between the rate it earns on loans and what it pays for deposits and bonds – which fell 5.5 per cent to €7.3bn.

The bank said it had its lowest yearly inflow of non-performing loans since its creation, adding €5.8bn of new bad loans to its stock of NPLs, a reduction of a third from the previous year.

Regulators have been pushing most Italian banks to reduce their high levels of non-performing loans and may be reluctant to allow Intesa to embark on a potentially risky expansion into insurance at a time when there are worries about both the health of the eurozone banking system and the region’s political stability.

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