Intesa Would Only Sell Eurizon Stake in Wider Alliance, CEO Says

(Bloomberg) -- Intesa Sanpaolo SpA would only sell a minority stake its Eurizon Capital fund management unit as part of a larger deal to combine the business with another manager, Chief Executive Officer Carlo Messina said.

“We’re looking to make an alliance with a big global player,” to add international experience and create a large European asset manager, the CEO said in an interview with Bloomberg Television’s Francine Lacqua. “At this point, we don’t have a target.”

Eurizon has about 315 billion euros ($364 billion) of assets under management, rising to 393 billion euros including those overseen by Penghua Fund Management -- a Chinese company in which it bought a 49 percent stake in 2007 -- as well as those managed by its U.K partnership and its Eastern Europe HUB. Eurizon posted a net income of about 123 million euros in the first quarter, when net inflows exceeded 3.3 billion euros.

The Financial Times reported in June that BlackRock Inc. was in talks to buy a minority stake in Eurizon. Intesa is talking with all the big global players, including BlackRock, as it looks for an alliance that adds international experience to supplement the Italian focus of Eurizon, Messina said in the interview Friday.

“If you want to play in the Champions League, you need someone who can help you in this game,” he said.

Intesa, which gets more than three-quarters of revenue from the Italian market, is seeking to boost businesses that bring high returns as low interest rates continue to restrict income from lending. As part of the plan, Messina aims to expand the bank’s more lucrative insurance and wealth-management divisions.

While Italy’s economic fundamentals are strong, Messina said he’s frequently asked about Italy’s political situation when he speaks with investors abroad.

“September will be a very important moment to understand the kind of economical, political decisions that the government will take on growth and especially on debt,” he said. “Debt is the real point of attention and it is a point on which, in my opinion, the government absolutely has to work. We have to go back to reality, and the reality is you can’t make expenditure if you don’t have inflows.”

Intesa reported second-quarter profit on Wednesday that beat analysts’ estimates but the performance of the bank’s core revenue generators -- net interest income and commissions -- were seen as a disappointment. Instead, profit was bolstered by businesses such as trading and financial assets.

Intesa shares switched between gains and losses and were little changed at 2.42 euros as of 11:09 a.m. in Milan.

©2018 Bloomberg L.P.