Bank of Italy to receive €1bn for liquidating holding in equity firm

Italy's central bank announced the ending of its shareholding of approximately €1 billion in the partly state-owned financial company, CDP Equity, on August 5.

The Bank of Italy said in a statement in Italian that it was liquidating its holdings of 13% of the firm's preferred shares and 7% of its ordinary shares. A spokesman said in an email to Central Banking that the bank expected to end its shareholding and receive the agreed fee "by the end of 2016".

The central bank would be paid €969 million by CDP Equity, the statement said, consisting of €646 million for the preferred shares and €323 million for ordinary shareholding – in addition to the dividend payments made by CDP Equity.

In the financial year ending in 2014, the Bank of Italy's records show that it received a profit of approximately €250 million from its holding in the FSI, later renamed CDP Equity.

Payments had been agreed by the central bank in agreement with CDP Equity's parent company, Cassa Depositi e Prestiti, known as CDP, and the minority shareholder, Fintecna group, on the basis of the company's net assets on December 31, 2015.

CDP, the parent company of CDP Equity, is a commercial bank, which is 50%-owned by the Italian state and has been closely involved in recent attempts to shore up parts of the country's banking sector. The central bank "has no other holding in CDP group", the spokesman said.

The Bank of Italy first acquired its investment in CDP Equity in March 2013, the spokesman said. That year, the central bank's 4.5% shareholding in insurance firm Generali Assicurazioni was transferred – then called the Fondo Strategico Italiano or Italian strategic fund, later renamed CDP Equity.

In turn, the Bank of Italy first invested in the insurance company in 1960, buying 4.5% of its equity, the spokesman said, adding that it made the investment in accordance with its policy of "investing in equities of primary issuers to create a reserve value".

The Bank of Italy had been obliged to divest its holding in Generali Assicurazioni after January 2013, when it became part of the directorate of the Institute for the Supervision of Insurance (IVASS). IVASS became Italy's insurance regulator on January 1, 2013, superseding the previous responsible body, ISVAP. The deputy governor of the Bank of Italy, Salvatore Rossi, is its president.

A statement from the central bank, dated June 30, 2015, shows it holds equity in four other companies, all of which are much smaller investments than its stake in the equity firm.

The central bank holds 2.15 million shares in the Istituto della Enciclopedia Italiana fondata da Giovanni Treccani, which it describes as an unlisted company that edits and publishes an Italian language encyclopedia and "works on arts and sciences".

This holding made a loss of approximately €4.5 million in the financial year ending in 2014. The Bank of Italy said it reduced its shareholding from 5.21% to 4.83% on 20 July 2015, "as a result of the entry of a new shareholder".