Venerdì, 19 Ottobre 2018

Italian corporate system upended by financial crisis


London, August 21 - The closely knit world of
Italian big business has begun to unravel after decades of
cronyism and capitalism, with change driven more by a lack of
money than any kind of crackdown or cleanup operation, according
to the Financial Times newspaper.
In an article published Wednesday, the London-based daily
tracked a series of major corporate shake-ups that have begun to
transform the way major businesses have operated in Italy since
as far back as World War Two.
"This is not about making the world a better place, it is
because the money is finished. Things are changing and in
typical Italian style, it is brutal. There is blood everywhere,"
the Financial Times said, quoting what it termed one of Italy's
most senior bankers.
As evidence, it pointed to pressure from investors forcing
insurer Generali to unwind cross-shareholdings with Mediobanca
that involved everything from newspapers and television to
insurance, banking, telecommunications, airports, construction,
and hotels.
Such major companies have been tightly linked, the article
states, through a system of connections known as "salotto
buono", which translates as "the fine drawing room" and has
become a symbol of a kind of old-boys' club manner of doing
But the economic crisis that devastated much of Europe in
2011 and brought Italy to the brink of bankruptcy marked the
beginning of the end of the club.
The system of cross-holdings helped to spread financial
woes very quickly from one stricken business to another,
explained the Financial Times.
As a result of the financial crisis, four of Italy's
largest corporations - Mediobanca, Generali, UniCredit and
Intesa Sanpaolo - have sustained losses on billions of euros of
interconnected holdings, putting the jobs of company executives
at risk, the newspaper reports.
"This is the very end of 'I appoint you because you are my
friends and you buy my shares because I voted you on the
board'," Davide Serra, chief executive of hedge fund Algebris,
told the newspaper.
"This shareholder pact mentality has been like a cancer
that went from politics to business to bureaucracy to justice.
Business is reacting first because it had no choice".
Some fear that seriously instability will result from the
crumbling of the salotto buono style because the Italian
government has no viable economic or long-term productivity
strategy as a replacement.
In a significant sign of the crumbling of the old system,
tax police arrested Salvatore Ligresti, 81, patriarch of one of
Italy’s best-connected dynasties last month along with two of
his children and several former executives of the Italian
insurer Fondiaria-Sai.
The arrests came as part of a probe into false accounting
and market manipulation.
No one has been charged but Ligresti is under house arrest
and several other suspects are being held.
The very fact that such high-profile figures could be
arrested has sent shockwaves through corporate Italy's elite,
the Financial Times notes.

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