MILAN – Intesa SanPaolo has cleaned out its books with a 5.8 billion-euro ($7.95 billion) write-down on its investments as it joined other Italian banks in preparing for a rigorous Europe-wide stress test, while announcing a slate of asset sales under a plan to boost earnings and dividends.
The write-down, which included 3.1 billion euros for non-performing loans, widened Intesa’s fourth-quarter loss to 5.2 billion euros ($7 billion) from 83 million euros a year earlier.
Italian banks have put aside more than 27 billion euros in loan impairment charges for 2013, mostly in the fourth quarter, as part of cleanup efforts as the European Central Bank starts a review of the region’s banks to identify weak spots in their finances and, if needed, request fixes. Banks also are trying to get into shape to ride the expected economic recovery.
The Italian banks’ provisions for bad loans include 7 billion euros at Intesa and 9.3 billion euros at Unicredit, which posted a stunning 15 billion-euro fourth quarter loss.
“These efforts have improved the banking system’s health as the operating environment stabilizes, although it remains to be seen whether more is needed,” Fitch analyst Francesca Vasciminno said in a note.
Intesa SanPaolo previously took a write-down of 10 billion euros in 2011.
For the year, Intesa SanPaolo said Friday its losses were 4.55 billion euros, compared with earnings of 1.6 billion euros last year.
To position itself for future growth, Intesa SanPaolo said it will sell its entire portfolio of non-core businesses, including shares in strategic Italian companies Alitalia and Telecom Italia, creating a “bad bank” internal unit for the disposal.
The bank said it plans to sell non-core shares with a 2013 book value of 1.9 billion euros as part of a new plan aimed at increasing earnings to 4.5 billion euros by 2017. Intesa this year sold off its shares in Generali insurance, Pirelli and others for a capital gain of 320 million euros.
“We started a process of massive disposal of our equity stakes,” CEO Carlo Messina told a presentation. “All our equity stakes will be dismissed by 2017.”
Intesa is part of an Italian consortium that rescued Alitalia in 2008 in a deal orchestrated by then Premier Silvio Berlusconi. Financial constraints presented by the economic crisis as well as the expected entrance of Gulf Carrier Etihad Airways into Alitalia have freed Intesa to reassess its 20 per cent stake in Alitalia.
Intesa said it will focus more on fee-intensive businesses in light of low interest rates.
It will pay out a total of 10 billion euros in dividends over the next four years. For 2013, the bank said it will pay out 822 million euros in dividends, or .05 euros a share. That will rise to 1 billion euros for 2014 and to 4 billion euros by 2017.