By Stefano Bernabei and Francesca Landini
ROME/MILAN, Dec 17 (Reuters) - Italy’s state bank has earmarked 160 billion euros ($173 billion) to support growth in the euro zone’s third-largest economy, in a more active policy for the 165-year-old institution, its new five-year plan showed on Thursday.
Public and private investment in Italy has languished well below that of most of its peers during a long economic slump since 2008, and the government is hoping that lending by the Cassa Depositi e Prestiti (CDP) can help turn things around.
The new business plan effectively ramps up the money CDP hopes to spend over the next five years by 60 percent compared with the 2011-2015 period.
The CDP, which has undergone a management shake-up driven by Prime Minister Matteo Renzi, said it will use the funds to lend for infrastructure projects, to buy stakes in groups deemed strategically important and to help export-focused and family-owned domestic firms.
The Treasury owns 80 percent of CDP, but the lender is formally outside the public sector. Under EU accounting rules, the money it spends does not directly increase Italy’s huge public debt.
However, the bulk of CDP’s funds come from post office savings and the bonds it issues so it must seek a return on the money it lends and cannot simply plough money into any scheme that is deemed useful for the economy.
Moreover, the European Union monitors the bank’s activities to ensure they do not violate state aid rules.
As part of its new business plan the CDP said it will employ new financial instruments including a private equity fund to help family-run companies grow and a “turnaround vehicle” to help firms in distress.
The CDP said it expects to attract additional European and private funds of around 100 billion euros.
“We have to offer foreign investors tools to invest in Italy at a time when their appetite for our economy and our firms is the highest I have seen in the last 40 years,” said Claudio Costamagna, the former Goldman Sachs banker appointed as CDP chairman in July.
Responding to criticism that its portfolio was without a clear focus, the new management said stakes in oil contractor Saipem, energy group AnsaldoEnergia, broadband firm Metroweb and bank services group SIA would be considered long-term strategic investments and put under a special umbrella.
These assets will be separated from stakes in other companies such as food group Inalca and oil valves maker Valvitalia, which would, instead, be sold. ($1 = 0.9229 euros) (Editing by Hugh Lawson)