Italy's 5-Star mayors set collision course with banks, utilities

Caltagirone SpA

21/06/2016 17:26

By Alberto Sisto and Gavin Jones 
    ROME, June 21 (Reuters) - The new mayors from Italy's 
anti-establishment 5-Star Movement who won control of Rome and 
Turin on Sunday are squaring for a confrontation with the 
management of financial firms and utilities they control. 
    Five-Star, whose main appeal is its tough stance on graft 
and privilege, has often spoken out against Italy's corporate 
elite. Analysts say its relations with business could be 
difficult as its political power increases.  urn:newsml:reuters.com:*:nL8N19C09B 
    The head of Rome's listed water and energy utility Acea, of 
which city hall holds a 51 percent stake, said on Tuesday he 
would seek a meeting with mayor Virginia Raggi, who threatened 
to change the company's management during her election campaign. 
    "It will be necessary soon to have a calm discussion about 
everything and we will ask for that. It's our duty to speak to 
all our shareholders," Acea CEO Alberto Irace told reporters. 
    Falls in Acea's share price in March were widely attributed 
to remarks by Raggi that if she was elected she would install 
new management and demand that the utility invested more to 
improve services rather than make profits.  
    Acea, whose other main stakeholders are Italian constructor 
and editor Francesco Gaetano Caltagirone and France's Suez 
Environnement, issued a statement on Tuesday denying press 
reports that its President Catia Tomasetti was ready to resign. 
    The principle that water services should be public and not 
profit-driven is one of the five policy platforms, or "stars" on 
which the 5-Star Movement was founded in 2009. 
    The 5-Star Movement trounced Italian Prime Minister Matteo 
Renzi in local elections last weekend, clouding his chances of 
completing his term of office. Five-Star won in 19 of the 20 
towns or cities where it had advanced to the run-offs. 
    In the northern industrial city of Turin, home of carmaker 
Fiat, the first move by new 32-year-old mayor Chiara Appendino 
was to call for the resignation of the chairman of the main 
stakeholder in Italy's biggest retail bank, Intesa Sanpaolo 
 ISP.MI . 
    Appendino said Francesco Profumo, who had been put at the 
helm of the banking foundation Compagnia di Sanpaolo by the 
previous mayor just a few weeks earlier "should quit because we 
did not agree with his appointment". 
    The banking foundations are non-profit organisations which 
became key shareholders in Italy's main banks when they were 
privatised in the 1990s. They finance local cultural and social 
activities and have become major political power bases.   
    Compagnia di Sanpaolo is Italy's second biggest banking 
foundation, controlling some 7 billion euros and wielding 
enormous influence in and around Turin. 
    "I would like to know if Profumo doesn't have the qualities 
needed for that role or if he needs to be changed just because 
he was named by me," outgoing mayor Piero Fassino said on 
Tuesday. 
    Raggi has refused to back Rome's bid for the 2024 Olympics, 
clashing with Caltagirone. The constructor has enormous 
potential business interests in the project, and has vigorously 
promoted it in the city's main newspaper, which he controls. 
    Raggi has promised to clean up the public transport company 
Atac and trash collection firm Ama, inefficient and loss-making 
operations which have both been at the centre of corruption 
scandals in recent years. 
    The head of Ama, Daniele Fortini, will offer his resignation 
on Wednesday, a source at the company told Reuters. The source 
added however, that this was normal procedure when a new mayor 
takes over and did not indicate Fortini expected to be replaced. 
 
 (Editing by Ralph Boulton) 
 ((gavin.jones@thomsonreuters.com; +39 06 8522 4232;)) 
 
Keywords: ITALY 5STAR/BUSINESS