Oct. 6 (Bloomberg) -- Intesa Sanpaolo SpA Chief Executive Officer Corrado Passera indicated the bank will impose “more aggressive” cost reductions to offset bad-debt provisions, according to a note from Bank of America Corp.
“Passera reconfirmed the 2011, 2013 and 2015 targets, although there looks to be an adjustment between more aggressive cost cuts offsetting provisions, with evidence of this in the third quarter,” according to a note obtained by Bloomberg News and e-mailed to clients by Bank of America Merrill Lynch, which hosted Passera at a conference in London today.
An Intesa spokesman declined to comment. The Milan-based bank, whose stock has lost a third of its value this year as Europe’s debt crisis spread to Italy, is shedding jobs and reducing costs to strengthen its finances. Intesa’s five-year plan, approved in April, targets net income of 4.2 billion euros ($5.6 billion) by 2013 and 5.6 billion euros in 2015.
Intesa isn’t interested in combining with smaller Italian lenders, Bank of America Merrill Lynch cited Passera as saying. Passera also confirmed that he expects to maintain a core tier 1 ratio, a measure of financial strength, at 10 percent for the rest of the business plan, the brokerage said.
Asked about a possible plan to recapitalize European banks, Passera indicated that “if the problem is sovereign debt, cure this and not the consequences of the sovereign debt,” the note said.
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