Mediobanca
Encyclopedia
Mediobanca is an Italian
investment bank
founded in 1946 at the initiative of Raffaele Mattioli (at that time CEO of Banca Commerciale Italiana, the largest bank in Italy which promoted its incorporation together with Credito Italiano) and Enrico Cuccia to facilitate the post-World War II
reconstruction of Italian industry.
Enrico Cuccia led Mediobanca from 1946 to 1982. Today, it is an international banking group with offices in Frankfurt, London, Madrid, Moscow, New York and Paris.
. The Banking Act of 1936 established a clear separation between short term and medium-to-long term financing and the major banks had opted for specializing in short-term loans and there was the institution that would deal with financing for the flotation of companies that wished to obtain a stock market listing. In addition to granting consolidated loans against certificates of deposit and savings books, Mediobanca developed its activity of placement of bonds and shares issued by Italian companies. The professionalism developed by the bank under the brilliant guidance of Enrico Cuccia enabled it to quickly acquire a position of leadership in the field of investment banking in Italy. In the mid-Fifties, Mediobanca entered into agreements with important foreign partners (Lazard Group
, Berliner Händel-Gesellschaft
, Lehman Brothers
, Sofina
) that enabled the bank to play a role on the international market and obtained a Stock Exchange listing in 1956.
Since its origins, Mediobanca has operated in collateral areas to the credit market, such as trust management (1948 with Spafid), the promotion of international trade (through trading companies mainly operating between Italy and Africa in the mid-fifties), consumer credit (in 1960 through the company Compass which had been set up ten years earlier to develop new initiatives with industrial partners), auditing (1961 with Reconta, which was the first Italian audit firm), leasing operations (1970 with Selma). The placement of securities of Italian companies on the domestic market and abroad led to the acquisition of small holdings which have increased over time reinvesting part of the profits. They became the bank’s main real investment for the protection of its equity. These packages favored the retention of major customers, the most important being Assicurazioni Generali
, Montedison, SNIA Viscosa
, Pirelli
and Fiat
. In 1963, together with other banks and financial institutions, Mediobanca led the formation of the first shareholder syndicate to intervene in the capital of a company, Olivetti
, with the objective of redefining its strategic purchases on several occasions of Generali
shares led to the bank being its largest shareholder (currently 13%). There were numerous, equally important, operations with Montedison, Fiat
, SNIA Viscosa
and Italcementi
.
When Mediobanca was set up, the shareholders authorized Enrico Cuccia to operate using his own judgment and he kept the bank free from the political influences that gradually affected IRI, the public entity that controlled the three Italian banks of national interest that were Mediobanca’s majority shareholders. 1982 saw the beginning of a period of intense friction with IRI under the presidency of Romano Prodi
, when the three banks were instructed to discontinue Mr. Cuccia’s mandate. Cuccia resigned as General manager by was elected to the Board by the shareholder Lazard while Mediobanca continued to be managed by two of his trusted aides, Silvio Salteri as CEO and Vincenzo Maranghi, his generally accepted “heir”. In 1988, when Antonio Maccanico took over the presidency, the conflict was settled and the bank was privatized by the setting up of a shareholders’ syndicate with equal representation of banking groups (initially the three founding banks) and private groups. On that occasion the position of CEO went to Vincenzo Maranghi and Cuccia accepted his appointment as Honorary President maintaining a symbolic presence in the bank and performing strategic consultancy. After Antonio Maccanico, called to government posts, the presidency went to Francesco Cìngano, who was Mattioli’s successor in Banca Commerciale Italiana.
The new banking law passed in 1993, abolished the specialization requirement allowing ordinary banks to enter the medium/long term credit market and generated a series of problems between Mediobanca and its banking partners, which ceased to be the almost exclusive channel for the placement of term deposits and bonds. In the changing context of the financial markets of the early nineties, Mediobanca evolved by engaging more decisively in investment banking operations, creating a major diversification in the private banking business and expanding its consumer credit area, finally developing an international presence. In the nineties, it was among the main players in the Italian program of privatization of large state-owned enterprises (the largest operations concerned Telecom Italia
, Enel
, Banca di Roma and Banca Nazionale del Lavoro
), also contributing to foreign programs in the United Kingdom, France, Germany and Spain.
Its final and perhaps greatest coup was its decisive role in the 1999 takeover of Telecom Italia
by Olivetti
. The deal was decided by the narrowest of margins with 51% of shareholders voting in favour of the deal. Under Cuccia's leadership, which lasted until his death in 2000, the bank was widely described as "secretive
" despite being publicly-traded
: meetings with analysts
or interviews with the media
were not granted.
While the years immediately following the resignation of Maranghi entailed the appointment of an external Presidency (Gabriele Galateri and Cesare Geronzi), subsequent events reestablished all the conditions guaranteeing the independence of the institution whose leadership today has Alberto Nagel as CEO and Renato Pagliaro as president.
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
investment bank
Investment banking
An investment bank is a financial institution that assists individuals, corporations and governments in raising capital by underwriting and/or acting as the client's agent in the issuance of securities...
founded in 1946 at the initiative of Raffaele Mattioli (at that time CEO of Banca Commerciale Italiana, the largest bank in Italy which promoted its incorporation together with Credito Italiano) and Enrico Cuccia to facilitate the post-World War II
Effects of World War II
The effects of World War II had far-reaching implications for most of the world. Many millions of lives had been lost as a result of the war...
reconstruction of Italian industry.
Enrico Cuccia led Mediobanca from 1946 to 1982. Today, it is an international banking group with offices in Frankfurt, London, Madrid, Moscow, New York and Paris.
History
Mediobanca was set up to provide medium-term financing for manufacturers and establish a direct relationship between the banking sector and the investment needs of the reorganization of industry after the devastation caused by World War IIWorld War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
. The Banking Act of 1936 established a clear separation between short term and medium-to-long term financing and the major banks had opted for specializing in short-term loans and there was the institution that would deal with financing for the flotation of companies that wished to obtain a stock market listing. In addition to granting consolidated loans against certificates of deposit and savings books, Mediobanca developed its activity of placement of bonds and shares issued by Italian companies. The professionalism developed by the bank under the brilliant guidance of Enrico Cuccia enabled it to quickly acquire a position of leadership in the field of investment banking in Italy. In the mid-Fifties, Mediobanca entered into agreements with important foreign partners (Lazard Group
Lazard
Lazard Ltd is the parent company of Lazard Group LLC, a global, independent investment bank with approximately 2,300 employees in 42 cities across 27 countries throughout Europe, North America, Asia, Australia, Central and South America...
, Berliner Händel-Gesellschaft
Händel-Gesellschaft
Between 1858 and 1902, the Händel-Gesellschaft, or "German Handel Society," produced a collected 105-volume edition of the works of Georg Frideric Handel. Even though the collection was initiated by the society, many of the volumes were published by Friedrich Chrysander working alone...
, Lehman Brothers
Lehman Brothers
Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
, Sofina
Sofina
Sofina, Société Financière de Transports et d'Entreprises Industrielles, is a Belgian holding company, headquartered in Brussels, which invests in several industrial sectors such as Telecommunication , Portfolio companies, Banks and Insurance , Private Equity , Services within the Company ,...
) that enabled the bank to play a role on the international market and obtained a Stock Exchange listing in 1956.
Since its origins, Mediobanca has operated in collateral areas to the credit market, such as trust management (1948 with Spafid), the promotion of international trade (through trading companies mainly operating between Italy and Africa in the mid-fifties), consumer credit (in 1960 through the company Compass which had been set up ten years earlier to develop new initiatives with industrial partners), auditing (1961 with Reconta, which was the first Italian audit firm), leasing operations (1970 with Selma). The placement of securities of Italian companies on the domestic market and abroad led to the acquisition of small holdings which have increased over time reinvesting part of the profits. They became the bank’s main real investment for the protection of its equity. These packages favored the retention of major customers, the most important being Assicurazioni Generali
Assicurazioni Generali
Assicurazioni Generali S.p.A. is the largest insurance company in Italy and one of the largest in Europe. It has its headquarters in Trieste...
, Montedison, SNIA Viscosa
SNIA S.p.A.
SNIA S.p.A. was an Italian firm located in Milan that manufactured defence products, textiles, chemicals, perfumes, and corrugated paper among other products. SNIA was founded in Turin in 1917 as a shipbuilder and gradually diversified into other areas of manufacturing...
, Pirelli
Pirelli
Pirelli & C. SpA is a diverse multinational company based in Milan, Italy. The company, the world’s fifth largest tyre manufacturer, is present in over 160 countries, has 20 manufacturing sites around the world and a network of around 10,000 distributors and retailers.Founded in Milan in 1872,...
and Fiat
Fiat
FIAT, an acronym for Fabbrica Italiana Automobili Torino , is an Italian automobile manufacturer, engine manufacturer, financial, and industrial group based in Turin in the Italian region of Piedmont. Fiat was founded in 1899 by a group of investors including Giovanni Agnelli...
. In 1963, together with other banks and financial institutions, Mediobanca led the formation of the first shareholder syndicate to intervene in the capital of a company, Olivetti
Olivetti
Olivetti S.p.A. is an Italian manufacturer of computers, printers and other business machines.- Founding :The company was founded as a typewriter manufacturer in 1908 in Ivrea, near Turin, by Camillo Olivetti. The firm was mainly developed by his son Adriano Olivetti...
, with the objective of redefining its strategic purchases on several occasions of Generali
Assicurazioni Generali
Assicurazioni Generali S.p.A. is the largest insurance company in Italy and one of the largest in Europe. It has its headquarters in Trieste...
shares led to the bank being its largest shareholder (currently 13%). There were numerous, equally important, operations with Montedison, Fiat
Fiat
FIAT, an acronym for Fabbrica Italiana Automobili Torino , is an Italian automobile manufacturer, engine manufacturer, financial, and industrial group based in Turin in the Italian region of Piedmont. Fiat was founded in 1899 by a group of investors including Giovanni Agnelli...
, SNIA Viscosa
SNIA S.p.A.
SNIA S.p.A. was an Italian firm located in Milan that manufactured defence products, textiles, chemicals, perfumes, and corrugated paper among other products. SNIA was founded in Turin in 1917 as a shipbuilder and gradually diversified into other areas of manufacturing...
and Italcementi
Italcementi
Italcementi is an Italian multinational company, quoted on the Borsa Italiana, which produces cement, ready-mix concrete and construction aggregates...
.
When Mediobanca was set up, the shareholders authorized Enrico Cuccia to operate using his own judgment and he kept the bank free from the political influences that gradually affected IRI, the public entity that controlled the three Italian banks of national interest that were Mediobanca’s majority shareholders. 1982 saw the beginning of a period of intense friction with IRI under the presidency of Romano Prodi
Romano Prodi
Romano Prodi is an Italian politician and statesman. He served as the Prime Minister of Italy, from 17 May 1996 to 21 October 1998 and from 17 May 2006 to 8 May 2008...
, when the three banks were instructed to discontinue Mr. Cuccia’s mandate. Cuccia resigned as General manager by was elected to the Board by the shareholder Lazard while Mediobanca continued to be managed by two of his trusted aides, Silvio Salteri as CEO and Vincenzo Maranghi, his generally accepted “heir”. In 1988, when Antonio Maccanico took over the presidency, the conflict was settled and the bank was privatized by the setting up of a shareholders’ syndicate with equal representation of banking groups (initially the three founding banks) and private groups. On that occasion the position of CEO went to Vincenzo Maranghi and Cuccia accepted his appointment as Honorary President maintaining a symbolic presence in the bank and performing strategic consultancy. After Antonio Maccanico, called to government posts, the presidency went to Francesco Cìngano, who was Mattioli’s successor in Banca Commerciale Italiana.
The new banking law passed in 1993, abolished the specialization requirement allowing ordinary banks to enter the medium/long term credit market and generated a series of problems between Mediobanca and its banking partners, which ceased to be the almost exclusive channel for the placement of term deposits and bonds. In the changing context of the financial markets of the early nineties, Mediobanca evolved by engaging more decisively in investment banking operations, creating a major diversification in the private banking business and expanding its consumer credit area, finally developing an international presence. In the nineties, it was among the main players in the Italian program of privatization of large state-owned enterprises (the largest operations concerned Telecom Italia
Telecom Italia
Telecom Italia is the largest Italian telecommunications company, also active in the media and manufacturing industries. Now a private concern listed on the Borsa Italiana, it was founded in 1994 by the merger of several state-owned telecommunications companies, the most important of which was...
, Enel
Enel
Enel may refer to:*Enel SpA, an Italian electricity company*Enel , a fictional villain in the One Piece manga and anime series*Enel, meaning third in the fiction of J. R. R. Tolkien, cf. Awakening of the Elves...
, Banca di Roma and Banca Nazionale del Lavoro
Banca Nazionale del Lavoro
Banca Nazionale del Lavoro SpA is an Italian banking firm. Founded in 1913 as Istituto di Credito per la Cooperazione, it was nationalized in 1929. It was re-privatized and listed on the Milan Stock Exchange in 1998, before being acquired by French banking group BNP Paribas in 2006...
), also contributing to foreign programs in the United Kingdom, France, Germany and Spain.
Its final and perhaps greatest coup was its decisive role in the 1999 takeover of Telecom Italia
Telecom Italia
Telecom Italia is the largest Italian telecommunications company, also active in the media and manufacturing industries. Now a private concern listed on the Borsa Italiana, it was founded in 1994 by the merger of several state-owned telecommunications companies, the most important of which was...
by Olivetti
Olivetti
Olivetti S.p.A. is an Italian manufacturer of computers, printers and other business machines.- Founding :The company was founded as a typewriter manufacturer in 1908 in Ivrea, near Turin, by Camillo Olivetti. The firm was mainly developed by his son Adriano Olivetti...
. The deal was decided by the narrowest of margins with 51% of shareholders voting in favour of the deal. Under Cuccia's leadership, which lasted until his death in 2000, the bank was widely described as "secretive
Secrecy
Secrecy is the practice of hiding information from certain individuals or groups, perhaps while sharing it with other individuals...
" despite being publicly-traded
Public company
This is not the same as a Government-owned corporation.A public company or publicly traded company is a limited liability company that offers its securities for sale to the general public, typically through a stock exchange, or through market makers operating in over the counter markets...
: meetings with analysts
Financial analyst
A financial analyst, securities analyst, research analyst, equity analyst, or investment analyst is a person who performs financial analysis for external or internal clients as a core part of the job.-Job:...
or interviews with the media
Mass media
Mass media refers collectively to all media technologies which are intended to reach a large audience via mass communication. Broadcast media transmit their information electronically and comprise of television, film and radio, movies, CDs, DVDs and some other gadgets like cameras or video consoles...
were not granted.
Mediobanca today
The death of Enrico Cuccia in June 2000 exacerbated tensions with the banking shareholders due to conflicts of interest, competition in the same markets and the central bank’s hostility towards Mediobanca’s management. In April 2003, Vincenzo Maranghi agreed to resign as long as the bank's independence was preserved. This was achieved by promoting two of his aides to top management positions, Alberto Nagel and Renato Pagliaro. They developed market operations more intensely (IPOs, M & A, trading of financial instruments), reducing the weight of historical shareholdings (some of which, like Fiat, were sold). They also achieved penetration of the main foreign markets, where the bank’s presence was established through local professional teams. With the launch of Che Banca! in 2008, operations in the retail banking segment expanded creating a model of multi-channel distribution (Internet, call centers, branches) capable of providing substantial deposit flows.While the years immediately following the resignation of Maranghi entailed the appointment of an external Presidency (Gabriele Galateri and Cesare Geronzi), subsequent events reestablished all the conditions guaranteeing the independence of the institution whose leadership today has Alberto Nagel as CEO and Renato Pagliaro as president.