Photo: A quasi-banknote that was issued by Istituto Bancario San Paolo di Torino in the 1970s.
Sanpaolo
IMI SpA
As a banking holding company, Sanpaolo
IMI had a very brief existence. It was
created in 1998 and in 2007, it merged with Banca Intesa to form Intesa Sanpaolo. However, like many Italian
banks, some predecessors of Sanpaolo IMI can trace their histories back over
four centuries to the Italian Renaissance period. Sanpaolo IMI was formed from
four regional banking groups: Istituto Bancario San Paolo di Torino, Istituto
Mobiliare Italiano, Cardine Banca and Banco di Napoli.
A
Few Words about Italian Banks’ Renaissance Origins
Many Italian banks can trace their
histories to as far back as the 15th century when local municipalities
or the Roman Catholic Church established individual monti di pietà (“mounts of
pity”, or “mounts of compassion”) as charitable foundations that granted small
loans to the poor in return for collateral. The goals of the monti di pietà are
to fight usury and poverty, to encourage savings and improve the social
conditions of the poor, as well as to stimulate economic development. In many
cases, the monti di pietà also accepted deposits and re-lent the funds to
borrowers.
Over the centuries, many of these
charity lenders became casse di risparmio (savings banks) but maintained their
original social mandates of charity for the poor, as well as to
promote art, education, health, scientific research; to conserve cultural and
religious heritage; or to develop public utilities. The unique dual objectives of Italy’s savings
banks, while honourable, created a banking system that was backward,
fragmented, bureaucratic, unprofitable and uncompetitive.
As the European Union prepared to
break down trade barriers based on national borders in the 1990s, it was clear
to the Italian government that its fragmented banking system would be taken
over by the much larger and efficient banks from Great Britain, France and
Germany. A series of banking reform
acts, most notably the Amato Act of 1990 and the Ciampi Act of 1998, were
implemented to privatize the state-owned or public-law banks and to foster
amalgamation of the regional banks into much larger national banks.
Istituto Bancario San Paolo di Torino SpA
The Sanpaolo side of Sanpaolo IMI is one of the oldest credit
providers in the world. In 1563, a
brotherhood known as the Compagnia della Fede Cattolica sotto l’Invocazione di
San Paolo was established in Torino (Turin). A few years later, the charity
founded a Monte di Pietà (singular of monti di pietà) to provide charitable
loans at low-interest rates to the poor on the pledge of personal belongings as
explained earlier.
The Monte di Pietà di San Paolo provided an alternative to usury,
particularly for Turin’s tradesmen and artisans, and marked the beginning of
San Paolo’s long history as a credit provider.
During the Renaissance period, Turin was a major trading centre in
Europe, and San Paolo grew in importance such that by the second half of the 17th
century, it was granted the administratorship of the public debt for the Savoy
region.
By the 19th century, San Paolo had evolved into a
lender in the modern banking sense. It
rode on Northern Italy’s rapid transformation into an industrial economy and became
a leading bank.
The 20th century was a turbulent one for Italy: in
1911, the Italo-Turkish War broke out, to be followed by World War I, both of
which depleted Italy’s coffers. In 1921,
when a major industrial-financial conglomerate (Ansaldo Group-Banca Italiana di
Sconto) failed, the Italian state intervened and rescued the group, commencing
the country’s long history of injecting state funds to rescue failing
industries. Then in 1922, Benito
Mussolini took over the country and began his fascist dictatorship. By the 1930s, poor administration combined
with the international economic depression led to the failures of many Italian
enterprises. In 1933, the government stepped in and created IRI (Istituto per la
Ricostruzione Industriale) to take over several major ailing banks. The 1936 Banking Act then set strict
regulations on the banks’ operations.
Stunningly, about 80% of Italy’s banking sector was directly or
indirectly run by, or relied upon the government for capital, and this practice
only ended in the 1990s.
During the 1930s, Istituto Bancario San Paolo di Torino itself
became a public-law bank, which means that it had no outstanding share capital
and relied on customer deposit as its sole capital base. Technically the Italian Treasury was the
resort should additional capital be required, but in reality all Italian
state-controlled or public-law banks had little access to capital for decades
until they were privatized in the 1990s.
Fascist Italy suffered further setbacks when it joined Nazi
Germany in declaring war on France, Great Britain and the United States in 1940.
Mussolini financed the war machine by
basically revving up the money-printing machines, which led to hyperinflation
and a collapse of the Italian lira.
Following the war, Italy continued to suffer from high inflation, slow
economic growth, a weak currency, and perpetual budget deficits. The
government’s response was to impose more restrictions on money supply, lending
and foreign exchange. Over time,
Sanpaolo di Torino nevertheless became the leading retail bank in northwestern
Italy.
Reforms were finally brought in in 1982 when the IRI began to
raise funds by issuing bonds to re-capitalize its state-owned banks. In 1990,
in preparation of a “single-market” economy within the European Community,
further changes were introduced when Italian banks were required to restructure
into the joint-stock company model (with limited liabilities) from their
public-law status. In 1992, San Paolo di Torino officially became Istituto
Bancario San Paolo di Torino SpA, and 21% of the shares were floated publicly.
.
Istituto Mobiliare Italiano SpA (IMI)
Compared to other Intesa Sanpaolo constituents, Istituto Mobiliare
Italiano's establishment in 1931 was decidedly contemporary. As mentioned earlier, Italy’s large commercial
banks became insolvent in the late 1920s as the economy faltered. New government regulations then forbade the
commercial banks from making medium- and long-term loans to Italy’s enterprises. The government then created the Istituto
Mobiliare Italiano to provide medium- to long-term financing to Italy's struggling
industries. In 1947, IMI took on the additional responsibility of managing and
coordinating foreign aid in rebuilding Italy following World War II.
Over time, IMI became a state-owned merchant and investment bank:
making long-term loans, subscribing to equity stakes, and underwriting
securities for corporate Italy.
In 1991, like other state-owned or public-law financial
institutions, IMI was converted to the joint-stock form and became Istituto
Mobiliare Italiano SpA. In 1994, IMI was
listed on the stock exchange as a final step towards a full private-sector bank.
Holding Cardine Banca SpA
The components that eventually became Cardine Banca are too numerous
and small to be explained in details in this publication, and only a brief
summary of the bank’s genealogy will be provided. In 1822, savings banks Cassa di Risparmio di
Padova and Cassa di Risparmio di Rovigo were established in the
Italian-speaking Veneto region of the Habsburg Empire. In 1928, they consolidated into the Cassa di
Risparmio di Padova e Rovigo. In 1994,
C.R. di Padova e Rovigo joined forces with Cassa di Risparmio di Venezia
(founded 1822) and Banca Agricola di Cerea to become the Casse Venete group. In 1998, yet two more savings bank, C.R. di
Gorizia and C.R. di Udine e Pordenone, joined the Casse Venete group, which by
now is a major regional bank in the northeast corner of Italy.
Meanwhile, along Italy’s Adriatic Sea coast, the Banca Popolare
Pesarese was established in 1875. It in
1989 merged with Cooperativa di Bagnacavallo to form the Banca Popolare
Pesarese e Ravennate. In 1994, Banca
Popolare Pesarese e Ravennate combined with Banca Popolare Abruzzese
Marchigiana and took up the new name of Banca dell’Adriatico. In 1997, Banca dell’Adriatico became an “SpA”
when it obtained joint-stock status.
In the Emilia-Romagna region, influential civic leaders with the
support of the Catholic Church founded the Cassa di Risparmio in Bologna in
1837. To comply with the Amato Act, C.R.
in Bologna became a joint-stock company and a parent company known as Gruppo
Bancario Casse Emiliano Romagnole SpA (or CAER for short) was formed in the
early 1990s. In 1997, a frenzy of
regional bank mergers saw CAER acquiring Banca dell’Adriatico.
In 2000, the Casse Venete group merged with the CAER group and
adopted the new name Holding Cardine Banca SpA.
The bank’s network spanned the entire northern Italy.
Banco di Napoli
SpA
Banco di Napoli can loosely trace its history back to the 1539
founding of a Monte di Pietà in Naples as a philanthropic pawnbroker. Between 1587 and 1640, another seven credit
institutions were established in southern Italy, and these eight banks eventually
became Banco Nazionale di Napoli in 1794.
During the 19th century, military conflicts in the Italian
peninsula led to the bank’s shutdown and reorganization under a different name. When the various warring city states were
unified into the Kingdom of Italy in 1861, the modern Banco di Napoli was
reborn.
In 1926, the bank was turned into a public-law institution
following the decade-long economic crisis.
In 1929, it consolidated several other ailing banks, becoming the largest
bank in southern Italy.
During the early 1990s, the bank’s poor governance and another
prolonged economic slump once again made Banco di Napoli financially unstable
just ahead of the launch of EU’s “single-market” model and dismantling of trade
and economic protection based on national borders. A series of reforms was carried out, starting
with the 1991 conversion of Banco di Napoli into the “SpA” joint-stock
format. The Italian government then
stripped out the bank’s bad loans into a “bad bank,” to be managed and wound
down gradually. Meanwhile, the Treasury
injected billions of new capital into the bank and transferred its
administration and ownership to the newly-privatized insurer Istituto Nazionale
delle Assicurazioni (INA, for 51%) and Banca Nazionale del Lavoro (BNL, for 49%).
Recent transaction(s):
- In 1998, Istituto Bancario San Paolo di Torino SpA acquired Istituto Mobiliare Italiano (IMI) SpA to form Sanpaolo IMI SpA, becoming the largest bank in Italy at the time.
- In 1999, Sanpaolo IMI launched a hostile offer for Banca di Roma SpA for Eur 7.5-billion (USD $8.2-billion) but Sanpaolo IMI's bid failed.
- In 2000, Italian insurance giant Assicurazioni Generali SpA launched a Eur 12.2-billion (USD $13.0-billion) hostile bid to acquire rival Istituto Nazionale delle Assicurazioni SpA (INA). Sanpaolo IMI had previously pursued a friendly combination proposal with INA to create a bancassurance giant. Eventually, Sanpaolo IMI agreed to let INA merge with Generali, in return for acquiring INA’s 51% stake in Banco di Napoli. Sanpaolo IMI subsequently launched an offer to acquire the 49% of Banco di Napoli held by Banca Nazionale del Lavoro.
- In 2001, Sanpaolo IMI bought a 10.9% stake in Holding Cardine Banca for ITL 1-trillion (USD $450-million). Cardine was the result of the merger between Casse Venete and Casse Emiliano Romagnole (CAER).
- In 2002, Sanpaolo IMI bought the remaining stake in Cardine Banca for USD $5.4-billion.
- Between 2000 and 2005, Sanpaolo IMI acquired a controlling stake in Cassa dei Risparmi di Forlì.
- In 2006, Sanpaolo IMI bought 87% of Panonska Banka from the Serbian government for Eur 122-million. Panonska Banka had 65 branches.
- In 2006, Sanpaolo IMI bought 80% of Egypt’s Bank of Alexandria from the Egyptian government for USD $1.6-billion. Bank of Alexandria had 188 branches and a 6.8% market share in the country.
- In 2007, Sanpaolo IMI was taken over by Banca Intesa for Eur 31.5-billion (USD $40.0-billion). The new company became known as Intesa Sanpaolo.
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