When Ignacio Jaquotot took over as head of international subsidiary banks at Intesa Sanpaolo last October, he faced a daunting task. The division had been in the red since 2011, non-performing loan ratios were rising inexorably thanks to a toxic combination of deteriorating asset quality and shrinking loan books, and the cost of risk had jumped to nearly three times the group average by the end of 2012.
Much of this was clearly due to factors beyond Intesa’s control. Economic stagnation across emerging Europe in the wake of the financial crisis put a dampener on the profits of all the big regional banking groups, and particularly those – such as Intesa – unlucky enough to have acquired operations in ill-fated economies such as Hungary, Ukraine and Slovenia in the scramble for banking assets that followed the break-up of the Soviet Union. What is more, from 2011 the group was also forced to grapple with unprecedented challenges in its home market as Italy was sucked into the eurozone crisis.
Intesa’s problems, however, have not all been external. A rapid change of control at the top of the group, which saw Enrico Cucchiani brought in as CEO in late 2011 and unceremoniously dumped again less than two years later, was replicated at division level.
