Italian Regulators Examine Mediobanca Role in Generali, La Fondiaria/SAI Merger

October 16, 2002

Consob, the Italian stock market regulatory body, has launched an investigation into the role played by Mediobanca, the powerful Milan based merchant bank, in behind the scenes manuevering concerning the SAI/La Fondiaria merger.

The bank has frequently been accused of influencing important financial decisions by Italian companies through its position as the country’s leading business bank.

Mediobanca owns 13.6 percent of Generali’s shares, and is widely seen as exercising control over the insurer’s decisions. Its conflict with ex-CEO and Board Chairman Gianfranco Gutty led to his departure last month. Gutty disagreed with Mediobanca’s support for the merger of SAI and La Fondiaria, which was finally approved by shareholders after a yearlong fight. The combination of the two companies would create Italy’s second largest insurer after Generali.

Consob is examining not only the preponderant role Mediobanca apparently plays in running Generali, but also its relationship with the financial holding company Primafin, which just happens to be the parent company of SAI. Even by Italian standards the links between the five companies appear to be too close, and could well be in breach of the European Union’s fair competition rules.

Consob has asked to review the main documents concerning the SAI-La Fondiaria merger in order to determine if the deal was in fact orchestrated by an agreement between Mediobanca and Primafin. A finding that they did in fact control the two insurers could lead Italian and EU authorities to challenge the merger on anti-trust grounds.

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