Genoa - “We believe in shipping and we will continue to support companies in this sector.” Thus spake Pier Luigi Montani, Banca Carige’s C.E.O., who kindly sat for the following interview.
Before the crisis, the most ambitious banking model was the international bank. During the crisis even the big players discovered the territorial model. Then came the crisis of the territorial banks. What is the banking model that you have in mind?
“Carige has always been a territorial bank, and it will continue to be one. Our story actually proves it. But let me be even more clear: the recovery process that we have under way is certainly not intended to change the identity of the institution. We mustn’t forget that, although our bank is important, compared to the five “big players” in the market, we are a small to medium-scale institution. We are a regional bank that will maintain strong interests in other areas, like Lombardy, Piedmont and the Veneto. It’s no accident that 80% of our activity will be concentrated in Northern Italy.”
You have just passed an ambitious plan that calls for an 800 million euro capital increase to be carried out by the summer. Will it happen?
“It certainly is an ambitious plan; remember that we’re talking about over half of our current market capitalization. But allow me to note that compared to other capital increases, this 800 million looks quite modest. I remain convinced that Carige can be confident that the plan will be realized, and within the set timeframe.”
Moody’s is not so optimistic. The rating agency has cast doubt on the bank’s ability to prepare itself for the BCE’s test next fall.
“Moody’s are just doing their job. It’s well known how the rating agencies work: they examine the past, not the present, and they issue alarms about the future. From this point of view, Moody’s opinion doesn’t surprise me. They expect us to prove them wrong, and the plan that we approved was our first concrete answer to the sceptics.”
Carige is looking for international investors.
”We are looking for anyone who is interested in investing in our bank.”
Sure, but the foreign “road show” that you have organized means that you are looking beyond our national boundaries. Have you found much interest?
”Between Milan and London we have met with seventy potential investors. The only problem that we have encountered is the size of the bank: as I was saying, we are not a large-scale institution and not everyone knows about us. But objectively speaking, there is interest.
Even in Italy?
”We very much depend on Italian investors, and especially Ligurian investors. In the future, the bank will need investors who know our region very well in all of its peculiarities and needs. That’s because there is a difference between investors who are “just passing through,” and stable partners.
When we talk about stable investors, the names Bonomi and Malacalza always seem to come up.
”As I have already said, we would be very happy to count them among our partners.”
In the current situation is there a real risk that Carige might end up under the control of a foreign group?
”In theory there is a risk, if you want to call it that, but it’s a risk that everyone is facing. Even Unicredit and Intesa.”
In your strategic plan you refer to cost cutting and better credit management. According to some analysts – Ernst & Young spoke about it recently – with the ECB test looming on the horizon, the behaviour of banks could have a negative effect on the credit crunch. How will Carige handle its clientele, from companies to families?
”I don’t see a direct correlation between the ECB tests and access to credit. In our case, the strengthening of our capital base will improve the relationship between the bank and the industries in our region. In Liguria the crisis has been felt more than elsewhere: our support for small and medium businesses will not falter.”
The shipping sector is now the largest industry in the region. How is Carige dealing with operators in the sector?
”I have had a chance to meet many of them. They all tell me that traffic is increasing, and that the Port of Genoa alone could double its traffic if it had decent infrastructure. Unfortunately, as a Genoese who has been in Milan for many years, I can only confirm that these limitations remain a problem. The benefits of a construction project like the high capacity/high speed train would be tremendous.”
Is Carige ready to do its part?
”The city must act before the bank will. Without the Third Pass the port’s potential may amount to nothing: that much is clear.”
Up until last year, Carige had planned to finance the acquisition of [the Genova] “Colombo” airport by the Chamber of Commerce. Is the dossier still open?
”No one has spoken to me about it for as long as I have been here.”
The transfer of the insurance contracts, which together with other assets are worth 90 base points for the Common Equity Tier 1 of Basil 3, has turned out to be quite complicated. Now that the IVASS inspection is over, is anything moving forward? ”Transferring an insurance contract is never easy. It is one of the few cases in which there is an Authority that watches sellers as closely as buyers. Having said this, the fact that we have closed our balance sheets and received IVASS’s instructions is helping quite a bit. Let’s say that once we see interest, we’ll move quickly to one or more specific proposals.”
When do you expect the deal to be finalised?
”Probably within the year.”