Formiche.net acquired access to the intelligence security report examining the French takeover of Italian banks, insurance companies and public debt
We’ll not be speaking French soon, but our financial system is picking up some slang. Formiche.net obtained access to a report written by the Italian parliamentary security committee (COPASIR) that details the French aims on Italy’s banks, insurance companies, and public debt.
According to Italy’s central bank, French institutional operators already have 11,83% of Italy’s public debt (roughly €285 billion) under their control. That percentage may increase significantly, warned COPASIR, exposing even more Italian assets to Paris’ influence.
The committee fears that French activism could promote the short selling of Italian assets or engage in credit default swap (CDS) schemes, something that is already happening due to the coronavirus pandemic, with damning effects on Rome’s economy.
Crucially, it could happen even as the country grapples with the post-pandemic financial recovery.
Worries hinge on rumours regarding two major mergers with foreign entities. One entails UniCredit, a strategic asset in its capacity as Italy’s second biggest bank. Another contemplates Generali, Italy’s biggest insurance company (and second biggest worldwide in terms of revenue).
The UniCredit dilemma
The Milanese bank is allegedly considering a merger with a foreign bank, such as the German Commerzbank, the French Crédit Agricole (CA) or Societé Générale (Socgen).
However, as of June 2020, UniCredit possessed €44 billion worth of Italian bonds. According to Italy’s antitrust organ, it also retains 10-15% of Italy’s overall collection from the Italian system, 10-15% of loans to families, 10-15% of loans to big businesses and 5-10% of those to small and medium ones.
COPASIR suspects the institute is disengaging from Italian assets. “Despite UniCredit’s importance for the nation’s economic and financial system, in the last years [it] has pursued some initiatives apparently aimed at releasing [itself from] the Italian central bank,” reads the report.
If the bank’s alleged strategy of detachment is carried out, future resources racked up by it in Italy could be reinvested abroad, weakening the Italian financial system as it grapples with financial recovery. But more importantly, warns COPASIR, the group’s independence could be threatened.
Sounding the Generali alarm
Assicurazioni Generali also incurred in COPASIR’s examination, as the company is allegedly considering merging with the French insurance behemoth AXA.
This could pose a national security risk as Generali possesses €85,5 billion in Italian bonds, amounting to 3,5% of the country’s overall debt.
Pointing at the already significant portion of the Italian debt owned by France, the report explains how giving Paris more of it could “pose a risk at the strategic level and relevant to the national interest.”
Authors also specify that they are referring to France given the circumstances, and that this reasoning in equally applicable to any other foreign nation.
COPASIR’s recommendation, according to the report, is to maintain Generali’s independence and ensure that its governance remains in Italy, considering that the company is also eyeing major stakes in two other hefty Italian institutions – Cattolica Assicurazioni and Mediobanca.
Here comes CDP
COPASIR then makes the case for Cassa Depositi e Prestiti (CDP), the State lender owned by the Ministry of Economy (by grace of its 82% stake in it), who could play a major role in Italy’s recovery process. Today, CDP has roughly €450 billion under its belt.
“The committee deems opportune increasing CDP’s involvement – though an appropriate and timely communication to the Parliament – in the strategies that the government must necessarily adopt to relaunch the many industrial and financial sectors hit by the crisis, making initiatives more structured and planned.”
COPASIR envisions that CDP could substantially act as Italy’s sovereign investment fund, defending the capitalisation of the country’s strategic assets. Thereby, it could also extend a helping hand to those businesses suffering the devastating consequences of the pandemic through its sheer size, amount of economic firepower, and network.
The institution could buy additional Italian bonds on top of the €70 billion’s worth it now controls. It can (and does) already support major national companies, the report highlights.
Finally, the committee stands by its recommendation to progressively reinforce Italy’s golden power – or lawful intervention of the State in private companies’ dealings for the sake of national interest and security.
In a recent interview to Formiche.net, the committee’s president Raffaele Volpi explained that the golden power must be made viable for the financial sector and “define an intervention perimeter” to stave off the appetite of foreign funds.
