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Italy’s lenders fear return to ‘bad old days’

April 26, 2010

by Giulia Segreti in Milan and Guy Dinmore in Rome

Published: April 26 2010
Politics and local turf wars will be played out this week when the resurgent and rightwing Northern League will seek to influence the appointment of the next chairman of Intesa Sanpaolo, Italy’s largest bank.

The financial community’s concerns that Italy is returning to the bad old days of overt political interference in the banks were heightened last week after a comment by Umberto Bossi, head of the Milan-based Northern League, an important partner in Silvio Berlusconi’s coalition government.

“We have won everything and a slice of the banks falls to us . . . It is clear that the larger banks of the north will have our men at all levels,” Mr Bossi declared after making strong gains in recent regional elections .

By capturing the wealthy regions of Veneto and Piedmont, the Northern League will be able to exercise control over local banking foundations, which are the single largest shareholders in important banks, including Intesa Sanpaolo and UniCredit.

Roberto Cota, Piedmont’s new governor, said: “[Intesa Sanpaolo] must return to what it used to be – a bank at the service of its territory.”

The Northern League found an unusual ally in Sergio Chiamparino, centre-left mayor of Turin, who caused a storm by stating in a newspaper interview that he backed Domenico Siniscalco, a former finance minister and the current head of Morgan Stanley in Italy, to replace Enrico Salza as chairman of Intesa Sanpaolo.

The mayor is understood to be backed by the Turin-based Compagnia San Paolo foundation which owns 9.9 per cent of Intesa Sanpaolo.

Shareholders are due to vote for the bank’s new supervisory board at its annual general meeting in Turin, the regional capital of Piedmont, on Friday.

The supervisory board nominates the management board and its chairman.

Mr Chiamparino claimed he was backed by Giulio Tremonti, Italy’s finance minister who is close to the Northern League.

Mr Tremonti wants banks to lend more to small and medium-sized companies.

One reason UniCredit and Intesa Sanpaolo have turned down government support was to avoid the political strings attached.

Mr Bossi’s broader aim is to change the role of the wealthy foundations so that they can invest in local enterprises rather than be restricted to funding social and cultural activities as they have been since the 1990s when their activities were split from local savings banks.

The Northern League also wants a stronger representation for Piedmont in Intesa Sanpaolo whose historic roots are divided between Turin and Lombardy’s Milan.

Mr Bossi’s grab for banking power has repercussions in Rome, fuelling ruptures in Mr Berlusconi’s People of Liberty party (PDL) .

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