Messina exposes the flaws of ‘Melonism’

“We demand respect.” Carlo Messina does not mince his words. During a hearing before the Commission of Inquiry into the banking system, the chief executive of Intesa Sanpaolo launched a scathing attack on the budget, which includes “South American-style” measures, but above all on the approach of those in the government who are trying to “bully the banks, but they don’t scare us” (the reference to Matteo Salvini is clear). Giorgia Meloni’s response came almost immediately: “I’m sorry that these are considered ‘South American’ measures,” said the Prime Minister, “I don’t think they are, and I think I would have been happier to have achieved the same result through an agreement, as has happened in previous years.” A few moments later, however, Giorgetti confirmed that the measures can be considered ‘South American’ (“I accept the criticism that this is a ‘South American’ measure, but I stand by the Habsburg-style policy of the last four years”).

But the problem, to return to Meloni’s words, is that this dialogue she referred to simply never took place. It is not merely a question of money, but of trust. Messina feels betrayed by a government for which he had acted as the point of contact and, to a certain extent, the guarantor with the banking system of an agreement that has been torn up by this Budget Bill. “Keeping to agreements is essential,” he says. The message to Meloni is unequivocal: something has broken down. “I was the government’s main point of contact throughout this period,” recalls the CEO of Intesa.

It was he, as a major banker, who had backed the agreement with the government on the previous Budget Bill, when the banks had agreed to contribute around 10 billion over three years. A deal that Messina, in patriotic and solidarity-driven terms, had personally defended even before his own international shareholders. 

Now the new budget adds, without any prior consultation, a further 7 billion in levies over the three-year period. It is time to get a few things off one’s chest. Messina responds indirectly to the Minister for the Economy, Giancarlo Giorgetti, who has repeatedly described the banks as beneficiaries of public aid through guarantees.

“If we weigh up the capital losses on government bonds against the benefits gained from guarantees, the result is to the detriment of the banks,” says the CEO of Intesa, emphasising that banks and insurance companies, which hold around 600 billion in government bonds, are “the state’s main creditor, more so than the ECB and the Bank of Italy”. Without their contribution, financing the public debt would be much more difficult. Messina points out that the banks are resisting “pressure from international bodies” calling for them to “reduce their holdings of government bonds”, despite the fact that they are “incurring significant losses”.

Messina also responds regarding profits, which totalled 8.2 billion euros in the first nine months of the year. But of this amount, he says, Intesa has already paid 5.2 billion in tax. Intesa’s tax rate, he adds, was already the highest in Europe before this budget. “The further afield you go, the lower the tax rate. We take pride in being based in Italy, but it is clear that there is a limit,” he says, highlighting the difference compared with other institutions that have already – quite legitimately – focused on internationalisation.

With regard to the dividends paid by Intesa, Messina points out that 3.5 billion went to institutional investors, whilst 2.5 billion went to households and banking foundations, which allocate these funds to social initiatives. In a burst of pride, Messina emphasises the group’s social role: “The greatest supporter of the poor is not the Church, it is Intesa Sanpaolo”. “There are those who try to ‘bully the banks’,” he said, clearly referring to Deputy Prime Minister Salvini’s attitude, “but that doesn’t scare us.”

The harshest criticism, however, concerns the state’s credibility. Messina announces – more explicitly than the Italian Banking Association (ABI) did during its hearing – that Intesa’s shareholders will challenge the new measures before the Constitutional Court. The harshest criticism is directed at the ‘spalma-Superbonus’, a provision which – as reported by Il Foglio on 3 November – is effectively a default on a debt: “A South American-style approach to debt management. It’s unbelievable: ten years without interest.” According to the banker, ECB rules could require these loans to be reclassified as something akin to a technical default, with possible consequences for the state’s other debts. A measure offering minimal benefits for the public finances, but with devastating effects on the Treasury’s credibility: “It is incredible that this provision was not discussed in advance”, because it would have been possible to find alternative solutions to tackle the liquidity problem without exposing Italy to such a reputational risk.

It is precisely the international dimension that makes this rift particularly significant. Messina has kind words to say about the fact that the Meloni government has “gained international esteem and credibility”, but he warns that there is a risk of jeopardising this capital built up over the years: “Mistakes could jeopardise relations not only with the banks, but also with international investors”. The government is driven by a political logic whereby “the more people oppose us, the more votes we get”. But it makes no sense to do all this “just to gain 1 per cent of the vote”, says Messina, especially if “you’ve lost 10 per cent” (the reference is, once again, to Salvini).

On the one hand, for the CEO of Intesa, there is the relationship between the sector and the government: banks can be seen as the ‘cash machine’ of politics, an easy target for winning a bit of support; but there is an economic and reputational cost to consider. On the other hand, however, there is clearly a personal issue concerning the way in which the CEO of Intesa felt he was treated by the government: “I put my reputation on the line for the agreement, risking a liability claim,” he said, emphasising his commitment to convincing his shareholders. Now that the government has breached that agreement, the relationship of trust has been irreparably broken.