Intesa Sanpaolo SpA CEO Carlo Messina is finalizing a new strategy aimed at winning back investor confidence, which took a hit when the lender decided against making a bid to take over Generali after confirmed it was exploring a tie-up with the insurer, the Financial Times reported May 29.
Messina's strategy, which is expected to be unveiled along with with the bank's 2017 annual results in early 2018, is expected to include plans to boost the lender's insurance business and asset management activities, while reducing hundreds of millions of euros in costs and shutting down hundreds of branches, the FT said, citing "people briefed on Messina's discussions with investors."
The Italian lender reportedly aims to increase the market share of its Italian general insurance operations and to strengthen its asset management business by a quarter through the addition of an extra €100 billion of assets.
Additionally, Intesa Sanpaolo's acquisition of a bank serving 20,000 tobacconists in Italy is expected to provide more day-to-day services to its own customers, allowing it to cut its 3,000 branch network by a third, which in turn will reduce the amount of money that it spends on operations.
The Italian lender also aims to reduce its bad loan portfolio by a third under the plan. Intesa Sanpaolo, which has committed to reduce its nonperforming loans to 10.5% or below of its loan book by 2020 from 14.4%, is expected to disclose in the week beginning June 5 a deal to sell a €2.5 billion bad loan portfolio to a consortium including U.S. distressed debt investors Christofferson Robb & Co. LLC and Bayview Asset Management LLC, the FT added.
The new strategy is also designed to make Intesa less reliant on net interest income from lending operations, which have been hampered by low interest rates, according to the FT. The bank wants to generate more than half of its revenue from fees and commissions, up from 44% at present.