Italy’s Intesa to raise €5bn fresh funds

ITALY’S second-biggest bank Intesa Sanpaolo followed German counterpart Commerzbank in announcing a multi-billion euro capital raising yesterday.

Intesa, Italy’s biggest retail lender, will raise €5bn (£3.1bn) from the capital markets by July to strengthen its balance sheet ahead of stringent new capital requirements on banks coming into effect in 2013.

The fundraising is part of a set of ambitious 2013 targets designed to increase the bank’s profitability and attractiveness, that will see it implement €770m of cost cuts including the loss of 3,000 jobs.

Intesa is targeting a 56 per cent jump in net profit to €4.2bn in 2013 from €2.7bn last year and wants to pay dividends totalling €5.3bn in 2013 and €13.5bn in 2015, it said.

The overhaul will make the bank better able to meet new Basel III capital requirements, which require banks to hold at least eight per cent of core Tier 1 capital against risky assets in 2013 and will increase annually.

The capital raising would increase Intesa’s high-quality Tier 1 capital ratio to 10 per cent, it said.

Italy’s central bank governor Mario Draghi has urged banks to take steps to ensure they are better capitalised ahead of further stress tests on banks to ensure they can survive another crisis or major economic downturn.

Although Italian banks weathered the financial crisis relatively well, their capital ratios overall are at the bottom of the European sector.

Intesa’s shares closed up 5.4 per cent at €2.24 on the news.