Passera: “I will remain in illimity beyond 2025. Banks and Europe? We're not there.” The exclusive interview by Affaritaliani.it
“The agreement with the shareholders was that I would be remained until at least 2025. But the time horizon is expanding, the objectives to be achieved have become even broader. In five years we have increased profit from zero to over 100 million, but I look further ahead because there is still so much to do.” Corrado It will passCEO and founder of illimity, tells a long story interview exclusive ad Affaritaliani.it what challenges the bank he created and led has to face. And what will be the models to inspire us for the years to come.
Starting from a certainty: that direct investment in “distressed” credit portfolios – in particular “suffering” – represents illimity's past is that today the idea is to continue to focus increasingly on specialized credit for SMEs. A potentially infinite audience of companies to help grow, restore and relaunch. The job of a bank that “gets its hands dirty”, that works with companies and that illimity has been doing since the first day of its birth, about five years ago.
But not a traditional bank, because it is supported by highly advanced proprietary technology that allows you to look to the future with even more optimism. More than seven billion in assets it's a profit over 100 million these are the numbers from which we start again in this 2024 which promises to be, once again, complicated for the global scenario in which we move.
Passera, how has illimity changed in recent years? Have you changed your way of understanding the bank?
In recent years we have continually had to adapt to even profound changes in the scenario. The reference market, that of SMEs, remained unchanged. Until some time ago, in addition to growth and restructuring credit, we also made significant direct investments in impaired credit portfolios. The latter activity has become less interesting due to the sharp decline in the market and the effects of calendar provisioning which penalize banks compared to non-bank operators. In this world, however, we remain specialized asset managers and servicers and the skills accumulated over these years have been put at the service of the asset-based financing desk which presents great potential.
How do you deal with companies? Do you also enter into the capital? And what time horizon do you set yourself?
Our job is to provide credit, then of course, when necessary, we also help companies find investors interested in providing the necessary equity. Giving credit for growth or restructuring and staying close to client companies for several years requires an approach very similar to capital investment: it is necessary to delve deeply into strategic plans and follow their implementation. For this reason, in addition to credit experts, we always involve sector experts who are often not employees of the bank: we call them tutors and they bring value both to us in the evaluation and to the financed companies.
Have SMEs changed lately?
It is difficult to talk about SMEs in general: they are such a large and jagged universe that there is no identikit that unites them. What is certain is that in these 10-15 years the various crises that have followed one another have made a great selection. The majority of businesses that remain now are very dynamic and capable. Of course, the braking effect of the many uncertainties that are accumulating can also be felt in this market segment. In my opinion, both in Italy and in Europe, there is a lack of sufficient capacity to redesign a common route to develop in the new world that is taking shape.
And what do you think about the political class, and the government in particular?
We focus too much on the immediate and not enough on promoting the necessary innovation in all fields: in business, naturally, but also in schools, healthcare and welfare. Innovation is crucial, yet we pretend not to understand that without increasing productivity there can be no increase in income. Instead of more and structurally rewarding those who invest in innovation and new technologies, we have reduced the incentives for these virtuous behaviors. This is not only a criticism of the Italian government and politics, but also of the continental ones. Either federal leverage is used to carry out the long-term investments needed to relaunch Europe, or the other great powers of the world will bury us. We have left almost all the rankings of the crucial sectors of the future such as technology, semiconductors, biomedical, defense, banking, shipbuilding…
In the shipbuilding sector, the operation for Fincantieri's acquisition of STX was stopped by the French government…
A not far-sighted move. It was an excellent, functional aggregation. But he chose to sacrifice her. Let's take semiconductors: we have a jewel like STM which is Italian-French led. Why continue to depend so much on the US and Taiwan? Why not create a great European champion capable of making up for systemic deficiencies and geopolitical shocks? When Biden realized the need to reduce dependence, he put a trillion dollars on the table: Europe must do it too, with federal investments. We have seen that Eurobonds work, let's use them to finance common strategic projects, let's use the same reaction capacity we had in the case of Covid. But there is a glaring absence of politics.
Let's go back to Italy: do you share the government's priorities?
All in all he has moved well in foreign policy. But there are very important issues such as demography for which, however, there does not seem to be sufficient interest: there will be a shortage of almost 5 million people of working age in the next 15 years and, in the face of an emergency of this kind, we should we focus above all on how to stop illegal immigrant boats? We should instead find much more courageous and articulated solutions: a very strong innovation effort will be needed to increase overall productivity, more effective training will be needed both for those who are not yet in the world of work and for those who are already there, we will have to encourage a greater female employment. We will naturally need new immigration and integration policies: we will have to compete with other countries to attract and retain immigrants who can be useful to Italy, perhaps by creating schools and universities in the countries from which they come.
There would perhaps also be resources in Italy, but then 50% of the budget is allocated to the Strait Bridge… what do you think?
As minister I blocked the project, I think the priorities should be very different. If we grow more and have the necessary resources, so be it, but now basic resources are lacking in various parts of Italy to have adequate infrastructure. The intermediate bodies and the social partners can make an indispensable contribution in defining priorities: the new leadership of Confindustria, for example, will be able to act as spokesperson for growth, development and innovation policies.
In summary: judgment on the government's actions? Negative?
(shakes his head and smiles) Eh… I expect greater attention to medium-long term issues once the last electoral appointments still awaiting us have been completed.
You previously referred to training: what would your priorities be? And what models should be adopted?
Unfortunately, we do not have a school suited to the needs. We lose too many young people along the way, too many leave with insufficient preparation or in any case unsuitable for the new world of work and technologies. Too many jobs remain uncovered due to lack of available skills. There are winning models in various European countries regarding technical and professional training, school-work alternation, apprenticeships, up to ITS and lifelong learning. But there are also many other areas of weakness to be filled: orientation, interdisciplinarity, teaching and learning methodologies, knowledge of foreign languages and in particular English, soft skills. There are, of course, successful cases of institutions that are in step with the times, and we must use them as examples to demonstrate that current serious shortcomings can be remedied. But we don't talk about the real problems of the school and we don't deal with them because the resistance to change is very strong and the effects are not immediate, but can only be seen over time. Evidently it's not a sexy topic for politics.
Let's get to the banking world: are you expecting big maneuvers in Italy?
Actually no. By now the bulk has been done, our country has moved very well in recent decades. The consolidation is essentially complete: only a couple of further operations between the medium-large banks are imaginable. Good work has been done on MPS, the government has further diluted its share, the next step should be that of a merger with a medium-large institution…
Work finished, then?
The work is never done. The challenge of digitalization and new Artificial Intelligence technologies has just begun. Competition from big tech should not be underestimated.
At European level?
Here we are definitely further behind. The banking union and the capital market union are at a standstill. There are technical difficulties, but in reality there is a lack of political and perhaps entrepreneurial will. Today in Europe we have only one global bank created from the combination of UBS and Credit Suisse. We are still too dependent on the big Americans. From this point of view, regulation is crucial and today the lack of a true banking union prevents the construction of true European banking groups. You can buy banks from other countries, but each must individually respond to local requirements and constraints without true integration.
Who is afraid of the banking union?
Politics in general which remains national and not European. In particular, the large countries that have not yet done their homework in the banking field such as Germany and the smaller countries that fear being “colonized”.
What purpose would a large European bank have as a result of the merger of one or more entities?
It would bring a double result: it would create large operators in investment banking that are alternative to the “usual” Americans. And it would make it easier to manage the financing of large European projects, which could be in competition with American projects. If we think even just about the great worlds of asset management and wealth management, there are some US operators who also manage our savings in quantities not far from the entire GDP of the Union. Sovereignty is also defended in the financial field.
Let's go back to illimity: are you planning to carry out M&A operations? Do you want to enter the risk game, perhaps acquiring “pieces” of banks in case the MPS stew were to be implemented?
I don't think we will see a division of assets in Siena. But even if it were to happen, we don't want to mix with more traditional models, even if made functional and profitable. illimity will continue to do what it has done up to now: the bank for SMEs, increasingly focused on credit dedicated to growth and business relaunches and less and less committed to the distressed world, from which we are emerging.
And what does Corrado Passera want to do?
I have never planned for the future and have always dedicated myself to my task to the best of my ability. In illimity there is also a strong personal interest in creating great value in the coming years.
One last question: you were the man who made Poste Italiane what it is today, you created the largest Italian bank, you were a minister… What is the thing you did that you are most proud of?
Without wanting to pretend to give effective answers, certainly that of having identified, attracted and valorised very smart people. There was a time when all the directors of the main Italian banks, apart from Jean Pierre Mustier, were – and in part still are – great people who had been on a “team” with me. I assure you: there is no greater satisfaction than seeing people you respect and with whom you have shared important projects “fly” high.
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