CEO CarloMessina told skeptical analysts May 6 that Italy's new bank rescue fund"could be a game-changer."

Speakingafter Intesa reportedfirst-quarter figures, Messina said it was especially positive that outsideinvestors might participate alongside the fund in investing in junior tranchesof securitized nonperforming loans. He said the overall effect of thegovernment measures targeting NPLs would be positive and that Atlante couldprove a game-changer if it reduced the stock of bad loans by between €30billion and €50 billion.

Messinaalso said that if bad loans were reduced by 25% in a year, this would bringItaly to levels of bad loans seen in other leading economies such as France.The possibility of establishing a true market and improving prices for NPLswould benefit Intesa as well as the wider banking system, he added.

Butanalysts on the call questioned the success and structure of the fund and itsadvantage to Intesa, which is investing €854 million. Said one analyst, inresponse to the support expressed by Messina: "I struggle to see suchoptimism."

Intesa'sinvestment is being offset by the €895 million net gain from the Setefi and disposal.Messina also said the bank's commitment would be limited to €1 billion and thatthe "reduction of systemic risk in my country is something I consider tobe in the interest of shareholders." Moreover, he expected to sell NPLs toAtlante if it were possible to do so at close to book value.

Whenquestioned about the fund's ability to acquire €50 billion of bad loans giventhe small amount of capital available, Messina said he did not want to be a keysource of information about the fund, thereby avoiding giving an answer to akey question. He also said one ought to await the final outcome ofthe key legal proposals on collateral recovery before judging them. Heexpressed firm support for the Italian government, notably Finance MinisterPier Carlo Padoan, but conceded that reforms targeting NPL recovery in thesummer of 2015 had had little effect.

Messina called Intesa's first-quarter performance"solid" given the challenging environment, even though net profitfell 24% year over year on the back of declines in net interest income, feesand commissions and net trading income. He affirmed that the bank would pay its targeted €3 billioncash dividend for 2016 while highlighting a fall in loan loss provisions.