Italian bank Intesa Sanpaolo SpA is covered wholesale funding over the next year as it moves to protect the debt crisis in the euro zone, the country's biggest retail bank said Friday.
With shares in the bank reduced to a record low, Chief Executive Corrado Passera, Intesa Sanpaolo said had helped insulate itself from rising costs of loans to complete 83 percent of its 2011 funds and long term in July.
Intesa Sanpaolo has also secured wholesale funding in the medium and long term for all of 2011 and could do without it until 2012, although it is not the bank's plan, he said.
"We can go along for at least two years without touching the wholesale market, but I'm sure the market will be back before that date," Passera said analysts in a conference call after the bank reported results second quarter.
Intesa Sanpaolo and fellow power UniCredit bank has been hit from a sell-off of bank stocks and bonds of the Italian government began early last month.
Yields on Italian government bonds have jumped to 14 year highs on fears that Italy, the third largest in the euro zone economy could be on the verge of a Greek-style financial crisis because of its huge debt The weak economic growth and political instability.
The sale has brought down banks Italian market valuations to levels last seen in the depth of the financial crisis of 2008-2009.
Price Intesa shares have fallen nearly 30 percent in the last month and earlier on Friday touched a record low. But recovered to close at 6.26 percent, while the STOXX Europe 600 € 1.307 index fell 0.98 pct banking sector.
ITALIAN EXHIBITION
Intesa Sanpaolo is very exposed to the Italian public debt, with 64 million, or 79 percent of its holdings of Italian sovereign debt securities, according to the slides in your presentation to analysts.
Passera defended the performance of the Italian economy, saying he had all the elements necessary for growth.
"The disappointing results of our actions is undoubtedly due to the vision of our country too negatively by the market and the fact that Intesa Sanpaolo is seen as a substitute for Italy," he said.
Intesa Sanpaolo Greek government debt held 559 million euros at the end of June. Ireland's debt amounted to € 187 million and debt of Portugal was 45 million euros.
Greek debt maturity in 2020 was 99 million euros, a decline of 25 million euros.
In the second quarter net profit was 741 million euros, up 12.1 percent from a year earlier and ahead of a Reuters Thomson I / B / E / S / forecast of € 690,690,000. The results were driven by gains from trade underpinned by capital gains.
Analysts said the results in line with expectations.
"In this market, the lack of surprises is good news. It is clear that the sovereign is still the key factor for the valuation of equities," said one analyst.
UniCredit, Italy's largest bank by assets, reported a forecast beating net profit on Wednesday and said it would meet analysts' forecasts for the year.
Among other banks publish the results on Friday, Royal Bank of Scotland slipped to a pretax loss of 678 million pounds (1.1 billion) in the second quarter, beaten by amortization of Greek government bonds and Irish customers struggling to pay their loans. (Editing by David Cowell and Greg Mahlich)
