“The outcome of the Brexit referendum is not a vote against Europe, but a vote against exclusion. We saw this in England, but it could soon be repeated elsewhere, because it’s the expression of a malaise that has by now assumed a global dimension.” For the head of the Poste Italiane Francesco Caio, the result of the referendum is the consequence “of a model of growth that in Western societies — the US as well as Western Europe — has exacerbated inequality in the context of low growth and has therefore robbed the system of hope. Social inequality has been accentuated by a technological revolution that brings added value and growth to companies and individuals that know how to use technology, but strongly excludes others,” says the executive.
His analysis is consistent with an alarm sounded recently by the Antitrust Authority on the risks of heightened social inequality created by [technological] innovation. Caio recalls how Poste Italiane — as early as two years ago — had spotted this trend and has made development and inclusion the core of its strategic plan. “The vision of an industrial revolution as an expression of democracy makes me smile. Digitization, left to its own devices, is exclusionary,” he says. In this context, according to Caio, Italy is well positioned to regain the role of co-leader in strengthening the European Union.
SERAFINI: Are you saying that Poste Italiane had already intuited certain trends that emerged some time ago? How so?
CAIO: In our strategic plan for privatization, we identified a real need for inclusion and development. And we are building on this: inclusion in financial transactions, for example, for us means a card like PostPay, which allows 40% of new Italian immigrants to have a bank account.
SERAFINI: But aren’t those who are excluded for most part Europeans who are not young anymore, and who fear for their future?
CAIO: Here we come to the subject of savings and returns. It’s a theme that’s absolutely central at this moment of zero interest rates. Inclusion for those who have savings and who want to secure their future — proposing investment instruments that can nudge customers who are used to fixed returns towards stocks, but with products that enable them to limit their risk.
SERAFINI: The government is very insistent on the creation of alternative instruments to bank loans for financing the real economy. You made that a linchpin of your strategic plan.
CAIO: A bridge needs to be created between savings and investment. It’s necessary to build, on a national or a European level, an industry that allows savings to stay in Italy or it will migrate to wherever yields are higher. An example that works is that of Poste Italiane, which attracts savings, and the Cassa depositi (state bank CDP), which is a strong lending vehicle.
It’s important to get the economy moving again through infrastructure initiatives: it’s not money that’s lacking in Italy, but projects. We want to accompany savers as they gradually shift to become investors. And then take these funds and make them available for projects that will get the economy moving again. Concrete examples are funds announced by the CDP, like the turnaround fund or the infrastructure fund, that we’re considering investing in, but which are just examples and can lead to other initiatives. In general, the entire private equity sector could also be involved.
SERAFINI: Given market volatility, what’s the outlook for the second tranche of the 30% of Poste Italiane being put on the market?
CAIO: We are working within the framework of a long-term decision made by the controlling shareholder, part of a process of privatization over the medium-term. The strategic direction has been affirmed, we’re aiming to go to market within a year. Obviously the shareholder will take the market situation into account, but it’s clear that we already have a strong indication from our brief history on the market so far — where shares have been stable despite a period of extreme turmoil. Despite Brexit, we performed 20% better than the index, partly because we distributed the dividend last week. There’s a perception of stability and of an ability to deliver on promised results. All the conditions for the transaction are there and the markets continue to show a real demand for shares in our kind of business — present in e-commerce, payments, finance and savings products.
The fundamentals of our business are still the same.
SERAFINI: What difference will the transfer of 35% that’s owned by CDP make beyond serving our immediate cash flow needs?
CAIO: From an overall perspective nothing changes. We have a relationship with the CDP on postal savings accounts that remains in place. The many initiatives that we are considering include those originating from CDP. The Ministry of Finance was clear. We have a strong ability to accumulate deposits and they are a strong instrument in lending.
M&A is also a part of the plan. When and how remains to be seen.