Waiting for Cuccia

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Enrico Cuccia

Is the end of an era nigh in Italy? Investors thought so in mid-April, after the 92-year-old éminence grise of Italian finance, Enrico Cuccia, was admitted to hospital with a respiratory illness. Shares in Mediobanca rose in the expectation that the old man's departure would bring long-overdue reform at the shady merchant bank.
But then came the predictable news from a worker at Milan's Luigi Sacco hospital: Cuccia is sitting up in bed and reading War and Peace, suggesting the wily Sicilian intends to stick around for another few chapters. Indeed, if he's able even to pick up Tolstoy's tome, Cuccia appears to have more strength left in him than the Milan stock market had hoped.
Those cynical souls who speculated on Cuccia's imminent demise had forgotten that in Italy, all important decisions have to pass through the honorary chairman of Mediobanca. "What Cuccia wants, God wants," was the famous observation of Leopoldo Pirelli, grand old man of the tyres-and-cables empire. Surely, even God would have to seek Cuccia's approval before letting the curtain fall on a 54-year career of masterly power-broking.
This is not to say the Mediobanca magic hasn't slipped a little lately. The bank was wrongfooted this spring by the decision of Banca Intesa, a new-found ally and core shareholder in Mediobanca, to distance itself from Cuccia's firm.

Intesa, Italy's biggest banking group, controls Banca Commerciale Italiana, through which Mediobanca has traditionally distributed securities. Intesa wants to build up its own investment-banking operation, but it remains to be seen to what extent it will compete head-to-head with Mediobanca.
It is also uncertain whether Mediobanca will have much of a securities operation before long. Last year, the firm arranged a series of massive M&A, bond and equity deals, but an internal power struggle in December led to the resignation of its head of investment banking, Matteo Arpe. Former insiders said there was no one left at Mediobanca qualified to fill Arpe's shoes.
The 35-year-old Arpe has since been courted by a string of US investment banks, but held out for the chance to run his own show.
On April 19, it emerged that Lehman Brothers, long a home for high-flying Italian investment bankers, had offered Arpe the role he wanted: heading a new banking group created to handle large or cross-border M&A deals and securities offerings.
The idea looks like a pan-European version of the elite division Arpe headed at Mediobanca. As befits a Cuccia protégé, Arpe knows how to get what he wants.

No. 6: If you don’t give it to me you’ll only lend it to someone else and look where that got us

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Waiting for Cuccia

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