Italy’s Five Star Mayors Set Collision Course With Banks, Utilities

Five Star

ROME (Reuters) – The new mayors from Italy’s anti-establishment Five Star Movement who won control of Rome and Turin on Sunday are squaring for a confrontation with the management of financial firms and utilities they control.

Five Star, whose main appeal is its tough stance on graft and privilege, has often spoken out against Italy’s corporate elite. Analysts say its relations with business could be difficult as its political power increases.

The head of Rome’s listed water and energy utility Acea, of which city hall holds a 51 percent stake, said on Tuesday he would seek a meeting with mayor Virginia Raggi, who threatened to change the company’s management during her election campaign.

“It will be necessary soon to have a calm discussion about everything and we will ask for that. It’s our duty to speak to all our shareholders,” Acea CEO Alberto Irace told reporters.

Falls in Acea’s share price in March were widely attributed to remarks by Raggi that if she was elected she would install new management and demand that the utility invested more to improve services rather than make profits.

Acea, whose other main stakeholders are Italian constructor and editor Francesco Gaetano Caltagirone and France’s Suez Environnement, issued a statement on Tuesday denying press reports that its President Catia Tomasetti was ready to resign.

The principle that water services should be public and not profit-driven is one of the five policy platforms, or “stars” on which the Five Star Movement was founded in 2009.

The Five Star Movement trounced Italian Prime Minister Matteo Renzi in local elections last weekend, clouding his chances of completing his term of office. Five Star won in 19 of the 20 towns or cities where it had advanced to the run-offs.

In the northern industrial city of Turin, home of carmaker Fiat, the first move by new 32-year-old mayor Chiara Appendino was to call for the resignation of the chairman of the main stakeholder in Italy’s biggest retail bank, Intesa Sanpaolo.

Appendino said Francesco Profumo, who had been put at the helm of the banking foundation Compagnia di Sanpaolo by the previous mayor just a few weeks earlier “should quit because we did not agree with his appointment”.

The banking foundations are non-profit organisations which became key shareholders in Italy’s main banks when they were privatised in the 1990s. They finance local cultural and social activities and have become major political power bases.

Compagnia di Sanpaolo is Italy’s second biggest banking foundation, controlling some 7 billion euros and wielding enormous influence in and around Turin.

“I would like to know if Profumo doesn’t have the qualities needed for that role or if he needs to be changed just because he was named by me,” outgoing mayor Piero Fassino said on Tuesday.

Raggi has refused to back Rome’s bid for the 2024 Olympics, clashing with Caltagirone. The constructor has enormous potential business interests in the project, and has vigorously promoted it in the city’s main newspaper, which he controls.

Raggi has promised to clean up the public transport company Atac and trash collection firm Ama, inefficient and loss-making operations which have both been at the centre of corruption scandals in recent years.

The head of Ama, Daniele Fortini, will offer his resignation on Wednesday, a source at the company told Reuters. The source added however, that this was normal procedure when a new mayor takes over and did not indicate Fortini expected to be replaced.

(By Alberto Sisto and Gavin Jones; Editing by Ralph Boulton)


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