MEDIOBANCA (Encyclopedia)

Mediobanca is the leading Italian investment bank. It is organized into three divisions: a) corporate and investment banking, which provides financial services to large and medium-sized companies in Italy, and internationally through its branch offices located in London, Frankfurt, Paris, Madrid, New York and Moscow; b) principal investing, which manages the Group’s most significant equity investments, including its 13% stake in Assicurazioni Generali, 14.9% of RCS MediaGroup, and 11.6% of Telco (primary shareholder of Telecom Italia); c) Retail and private banking, which brings together the Group’s activities in consumer credit (Compass), retail banking (CheBanca!) and private banking (Compagnie Monégasque de Banque and Banca Esperia). Mediobanca’s shares are owned by 59,000 shareholders, who include several leading industrial and financial groups which are parties to a shareholders’ agreement controlling 42% of the Bank’s share capital. As at 31 December 2012 the Group had some 3,500 staff on its books, and assets totalling €79.6bn.
Mediobanca, short for Mediobanca – Banca di Credito Finanziario S.p.A., was set up straight after World War II on the initiative first of Banca Commerciale Italiana (now Intesa San Paolo), then Credito Italiano (now UniCredit) and later Banco di Roma (subsequently Capitalia, which in 2007 was merged into UniCredit), in order to “meet the medium-term financing requirements of Italian manufacturing enterprises” and to forge a “direct link between the investment community and the need for finance to rebuild Italian industry” (Banca Commerciale Italiana annual report, 1945).
It was thus one of the instruments that allowed Italian companies to finance, with permanent resources, first the reconstruction of their war-damaged production facilities, and second their growth, international and domestic, as part of the transformation process which turned Italy into one of the world’s leading industrialized countries. At first Mediobanca confined itself to granting medium-term credit, in accordance with the regulations in force at the time. But in October 1973, a formal decision was made to extend the Bank’s operations to provide finance on terms of up to twenty years.
Its primary commitment following its inception was to design operations to collect medium- and long-term deposits, to be used in financing companies. In this connection, market analysis – domestic and international – was fundamental, as was application of advanced techniques in terms of granting finance and handling placements. From the outset the Bank adopted the practice of publishing information prospectuses describing the business of the issuers whose securities were to be placed, in line with international standards, the objective being to attract flows of foreign investment to a country where resources were still scarce. In the 1950s, a network of international trading companies was established, chiefly in Africa, to facilitate the development of Italian mercantile activities. In the same years Mediobanca enhanced its own capabilities to operate on international markets by entering into agreements with leading European and US banking groups (Lazard, with headquarters in New York, London and Paris, Lehman Brothers, Berliner Handels Gesellschaft, and Sofina). In 1956 Mediobanca was admitted to listing on the stock market, the first in this sector after banks’ shares had been withdrawn from the official lists following the stock market crisis of the 1930s; and it was Mediobanca which brought the three large IRI group banks – its founders – back to the market in 1970. Until the 1980s the business of granting credit to industry was an important one, in which Mediobanca demonstrated its unparalleled capabilities by basically not incurring any losses as a result of customer insolvencies. Of equal importance was the work of coming alongside companies as they came to the market (Mediobanca managed 30% of all Initial Public Offerings - IPOs in the 1983-93 period, 41% if measured by value), along with action to stabilize the ownership of the most important Italian companies (Olivetti, Montedison, Fiat, Snia, Pirelli, Italcementi), also linked to the most critical phases in the selection of efficient managers. Mediobanca played a key role in the restructuring of Italian industry, especially between the 1970s and 1980s, strengthening its profile as the bank of choice for the leading groups in Italy.
In 1988 the Bank’s shareholder structure, which until that point had consisted of a small set of banks, was altered to introduce a distinction between public and private shareholders. The former, namely the state-owned banks, were in turn privatized following the sell-off programme implemented by the Italian government in the 1990s. In this period Mediobanca was one of the leading players in the privatization processes with the main deals in which it was involved the placements of shares in Telecom Italia and Enel.
Since the 1990s, following changes to the scenarios in Italy and elsewhere and changes also to sector regulation (with the end of specialization and the introduction of mixed banks), Mediobanca has developed its activity in the area of advisory and capital market services provided to corporates, and strengthened its portfolio of equity investments, chief among which is its stake in Assicurazioni Generali, of which it became the leading shareholder. At the same time new branch offices have been opened outside of Italy. In 2000 Mediobanca entered the private banking sector, setting up Banca Esperia (50:50 joint venture with Mediolanum), and acquiring Compagnie Monégasque de Banque in 2003. In recent years it has enhanced its operations in consumer credit via Compass, which has operated in this sector since 1960. In 2008 a new retail bank, Che Banca!, was established, using a multichannel distribution platform (internet, call centre and branches).
Mediobanca has based its growth on the independence of its management and development of internal resources, continually equipping itself with the skills it needs to adapt to changes in the markets and the companies it serves. The Bank’s founder, Enrico Cuccia, led Mediobanca until 1982, but until his death in 2000, continued to act as mentor to his pupils Silvio Salteri (1982-1988) and Vincenzo Maranghi (1988-2003). Management of the Bank eventually passed on to two of Maranghi’s closest collaborators, Renato Pagliaro and Alberto Nagel, who continue to lead it to this day (the former as Chairman, the latter as Chief Executive Officer - CEO).
Link: http://www.mediobanca.it



Editor: Fulvio COLTORTI