Draghi Reins In Italy State Bank That Wanted to Copy Wall Street

(Bloomberg) -- Italy’s state-backed lender is in for a sweeping overhaul that will raise questions about the future of its investment-banking talent, after Prime Minister Mario Draghi replaced its freewheeling chief executive officer with a long-time ally from the European Investment Bank.

The appointment of Dario Scannapieco reflects Draghi’s determination to see a change of strategy at the lender, Cassa Depositi e Prestiti SpA, according to officials familiar with his thinking.

Under the previous team led by Fabrizio Palermo, CDP morphed from a plodding guardian of postal savings into a streamlined government investment vehicle.

Palermo was named to the top job at the bank by the populist government led by Giuseppe Conte, and under his watch CDP made a name for itself through a series of high-profile deals that reflected the Conte administration’s activist approach to the corporate world.

In little more than a year, CDP acquired a stake in stock-market operator Euronext NV, was set to become the biggest investor in payment services provider Nexi SpA, raised its stake in telecom company Open Fiber SpA and, perhaps most famously, led the drawn out 9.3 billion-euro ($11.3 billion) acquisition of Autostrade per l’Italia SpA from the billionaire Benetton family.

But the lender’s strategy may now shift from equity investments to broader financing activities following Draghi’s decision to replace Palermo with 56-year-old Scannapieco.

Read More: Inside Palermo’s Plan to Make CDP a Banking Heavyweight in Italy

Scannapieco and Draghi have worked together since the 1990s, when they helped fashion the country’s landmark privatization push and his arrival reflects Draghi’s desire to see the Italian state take a less interventionist approach to the economy.

The prime minister made the appointment personally, turning down Palermo’s requests for a face-to-face meeting in the process, according to the officials, who asked not to be named discussing private conversations. A spokesman for Draghi declined to comment.

Under Palermo’s tenure, CDP increased its headcount to around 1,000 from about 800, with a string of high-profile recruits from the private banking industry.

One senior banker, Vito Lo Piccolo, already decided to leave back in April as speculation was building about Scannapieco’s appointment. He will become a managing director at Bank of America Corp. A number of CDP’s top managers have contacted headhunters since Palermo was replaced, according to people familiar with the matter.

Scannapieco, who officially started in the job June 1, has been camped out at CDP headquarters across the street from the Treasury in Rome which were refurbished under Palermo. He’s been sounding out the lenders’ top managers on potential shifts in strategy and more departures are likely, officials said.

Strategy Shift

While he has not publicly revealed his plans, Scannapieco has already taken some symbolic decisions that point to a change in culture, for example, giving staff access to an elevator that had been reserved for his predecessor’s private use.

His broader revamp of the bank’s strategy is widely expected to mean a leading role in managing the recovery funds available to rebuild after the pandemic, partly replicating funding models he’s familiar with from his 14-year tenure at the EIB, according to officials familiar with his thinking.

Cassa Depositi is due to begin disbursing some 3 billion euros of Treasury money to help companies ravaged by the pandemic. That’s only the first tranche from a 40 billion-euro pool of aid.

The new fund, originally announced by the previous government, promises to be a key element in Draghi’s plan to relaunch Italy’s economy. It will allow the state lender to take part in capital increases or offer financing to companies with more than 50 million euros of revenue.

The new CEO, however, will only have three years to impose his vision on the lender, given the short tenures Italian state managers are given. It’s an ambitious task, as Cassa Depositi has grown to assume out-sized power and influence in the country, with some critics charging that its lack of transparency clouds its mission of helping boost Italian companies.

Founded in the 19th century and dating back to before the birth of a unified Italy, CDP has historically handled management of Italians’ postal savings, which today total more than 275 billion euros. But the bank has also built up controlling stakes in some of Italy’s largest companies, including Eni SpA, Snam SpA and Webuild SpA.

CDP now has over 500 billion euros of assets -- more than most of Italy’s privately held lenders -- and it posted 2.8 billion euros in net income last year.

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