Ital­ian bank In­tesa San­paolo re­ports huge losses

The Pak Banker - - COMPANIES/BOSS -

MI­LAN: Ital­ian bank In­tesa San­paolo re­ported a net loss of 4.55 bil­lion eu­ros for 2013 on Fri­day, af­ter huge as­set write­downs to strengthen its bal­ance sheet in readi­ness for stress tests.

The bank, the sec­ond-big­gest in Italy, turned in a net loss of 5.19 bil­lion eu­ros ($7.1 bil­lion) in the last three months of the year.

That was caused by a charge for write­downs of 5.797 bil­lion eu­ros. Ex­clud­ing the ef­fects of these as­set de­pre­ci­a­tions, the out­come for the year was a profit of 1.218 bil­lion eu­ros, and for the last quar­ter a profit of 578 mil­lion eu­ros. The net out­come for 2013 was far worse than the re­sult for 2012 when the bank made a net profit of 1.605 bil­lion eu­ros, in­clud­ing a loss of 83 mil­lion eu­ros in the last quar­ter.

For 2013, an­a­lysts had ex­pected the bank to write down the value of as­sets by 5.0-8.0 bil­lion eu­ros.

Along with other big banks in the eu­ro­zone, In­tesa San­paolo will soon be judged by the Euro­pean Cen­tral Bank and by the Euro­pean Bank­ing Author­ity on its abil­ity to with­stand fi­nan­cial shocks.

This pro­ce­dure of new, tough stress tests is part of a new frame­work, in­clud­ing pow­ers for the ECB, to en­sure that the bank­ing sys­tem can with­stand ma­jor strains. Other Ital­ian banks have also cleaned out their bal­ance sheets in or­der to strengthen their ra­tios of risks to share­hold­ers' cap­i­tal. UniCredit and BMPS have taken heavy losses for 2013 for this rea­son.

In­tesa San­paolo said that its bal­ance sheet was now "very strong" and that it was one of the few banks in the world which al­ready met the new Basle III risk ra­tios in terms of cap­i­tal and avail­able funds. The board rec­om­mended hold­ing the div­i­dend steady at 0.5 eu­ros. The bank also out­lined its strat­egy up to 2017, tar­get­ing net profit of 4.5 bil­lion eu­ros, and a re­turn on eq­uity of 10.0 per­cent.

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