January 23, 2018 / 11:27 AM / a year ago

Intesa Sanpaolo's top priority in plan is cutting bad loans - CEO

DAVOS (Reuters) - The top priority in Intesa Sanpaolo’s (ISP.MI) new business plan will be cutting the Italian bank’s exposure to non-performing loans, Chief Executive Carlo Messina said on Tuesday.

“We are ready to present a new plan which will increase value creation for the group and priority number one will be reducing the stock of non performing loans,” Messina told Reuters TV at the World Economic Forum in Davos.

Italy’s biggest retail lender is due to present its business plan on Feb. 6.

At the beginning of January the bank said it was considering selling its debt collection business and a bad loan portfolio to Sweden’s Intrum Justitia (INTRUM.ST), marking a strategy shift.

Until then the lender had preferred to manage its soured loans internally through a bad loan unit.

Intesa held 54 billion euros (47.43 billion pounds) in gross impaired debts at the end of September, or 13.7 percent of its overall loans.

The European Central Bank in October proposed tougher rules on new loans turning sour and said it may also review its position on the stock of existing bad debts.

These proposals triggered complaints in Italy, home to a quarter of the euro zone’s bad loans, with politicians and lenders saying they could hurt economic growth and discourage lending.

Carlo Messina, CEO of Intesa Sanpaolo Bank looks on during a shareholders meeting in Turin, Italy April 27, 2017. REUTERS/Giorgio Perottino

Messina said that it would be difficult were the ECB to apply new rules on existing bad loans but more likely that tougher regulation would be taken with regards to bad loan inflows.

“In any case, for Intesa Sanpaolo it is not important,” Messina said.

When asked about possible M&A in the asset gathering business, Messina said Intesa Sanpaolo had significant potential to grow its asset management business internally.

Reporting by Silvia Alosi; writing by Francesca Landini; Editing by Keith Weir

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