Mediobanca Reports Quarterly Loss on Securities Writedowns

Mediobanca SpA, Italy’s biggest publicly traded investment bank, posted a fiscal fourth-quarter loss after writing down equity holdings of 287 million euros ($384 million).

The net loss of 217 million euros in the three months through June compared with a loss of 24 million euros a year earlier, the Milan-based bank said in a statement today. Mediobanca scrapped a dividend on fiscal full-year results in accordance with the Bank of Italy’s recommendations, it said.

Chief Executive Officer Alberto Nagel is planning to sell stakes in companies including Assicurazioni Generali SpA, Telecom Italia SpA and RCS Mediagroup SpA as part of a plan to return Mediobanca to profit. In June, the bank accounted for all of its publicly traded securities, with the exception of Generali shares, as assets available for sale, writing down their value based on market price. The bank is aiming to increase revenue from banking activities to 2.1 billion euros by 2016 under a three-year plan.

Mediobanca said it cut its equity holdings to 4.1 billion euros from 4.3 billion euros a year earlier. The bank reconfirmed a goal of reducing the holdings by 1.5 billion euros more over the course of the plan.

Telecom Italia

One-time losses in the fiscal year related to the writedowns included 38.5 million euros for shares in publisher RCS and 319.7 million euros for a 12 percent stake in Telco SpA, the company controlling Telecom Italia, the bank said.

Nagel plans to leave the Telco investor group this month and to sell the Mediobanca’s 2.6 percent stake in Telecom Italia within three years, the bank said.

Mediobanca climbed 2.4 percent to 5.14 euros at 4:11 p.m. in Milan, taking gains this year to 10 percent and valuing the company at 4.4 billion euros. The benchmark Stoxx 600 Banks Index advanced 14 percent since December.

“The fourth-quarter net loss was lower than we expected thanks to lower impairments on securities and higher core revenue,” Anna Maria Benassi, head of Italian equity research at Kepler Cheuvreux in Milan, in wrote in an e-mailed report to clients. “Main positive surprises” come from net interest income and fees, she said.

Net interest income, which includes interest earned from loans minus interest costs from borrowing, rose 3.2 percent from a year ago to 264.6 million euros and fees increased 12 percent to 109.5 million euros, the bank said. Revenue fell 6.3 percent to 423.6 million euros, hurt by a trading loss.

Risky Assets

Operating costs rose 0.8 percent from a year earlier to 195.4 million euros. Mediobanca’s loan-loss provisions increased to 142.8 million euros in the quarter from 141.5 million euros a year ago.

Mediobanca said it has completed goals for reducing leverage on corporate loans, cutting its risk-weighted assets by 5 percent in the year ending June to 52.4 billion euros.

The core Tier 1 capital ratio, a key measure of financial strength under less stringent Basel capital standards than Basel III, fell to 11.7 percent at the end of the second quarter from 12 percent in March, Mediobanca said.

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