Monday, May 09, 2005

Justice you can bank on

Italians, or more precisely Tuscans, invented modern retail banking some 600 years ago. The Bank of Siena proudly advertises on its Bancomat slips "dal 1472", putting it in the select company, along with some Belgian beers, of one of the world's oldest brands. The concept of lending money at one rate and collecting at a higher rate is a business that will be thriving 600 years from now no doubt. There will always be people like me needing money to borrow from a bank and happily willing to pay them back a bit more for the priveldge. This concept works (or has the potential to work) everywhere. That is, except in Italy. Today, Italian banks treat customers they don't know with outright suspicion. My personal dealings with Unicredit, Italy's largest lender, have taken years off my life. This is the most risk-averse institution I've ever encountered. They have a newly minted policy in which they will not lend to non-Italians (a brilliant maneuver in this booming property market). Now, of course my problem (and theirs, apparently) is they have been lending this scary foreigner money for the past 3.5 years. So when I tried recently to amend the terms of my mortgage they flatly declined on the basis of my said foreignness and then heroically informed me that I should consider myself lucky that they continue to conduct business (code for take my money) with me at all. End of negotiation. Basta cosi.

When I retell this tale, by the end, I can see the listener shrink back uneasily. I'm not sure if it's the bulging veins in my cranium, the wild gesticulations, the don't-fire-I'm-on-your-side tone, or perhaps, just perhaps, profound sympathy for my plight.

I'm thinking of taking my story to Amsterdam where I know I will find some sympathetic listeners. Dutch bank ABN Amro is trying to buy a regional bank in Northern Italy, Banca Antoniana Popolare Veneta, or Antonveneta for short. ABN Amro made a generous cash offer for the significantly smaller Italian bank, one, that on paper, the Italians could neither refuse nor beat. So, what did the smaller bank do? They cooked up a classicly Machiavellian scheme in which they called on the assistance of a neighboring bank, Banca Poplare di Lodi (BPL), to thwart the deal. BPL marched in and bought up 29 % of Antonveneta shares and then wham replaced the board of Antoveneta with cronies who refuse to do business with the Dutch. In stickball parlance, this would be akin to the losing team walking off the schoolyard with the ball, bat, the opponent's shoes, their moms' car keys, and declaring "thanks for playing. We'll inform you later if you've won or not." The Dutch, as would the winning stickball team, protested. The nah-nah-nah-nah answer could come as soon as today, and the response may be the final slap in the face for the Dutch. Apparently bank regulators Consob will find that si BPL and Antonveneta were in cahoots to derail the higher bidder. The penalty? BPL must pay cash for Antonveneta, at a remarkable discount of course, if they want to keep the bank in Italian hands. Italian justice at its finest. Your crime and punishment is you acknowledge you broke the rules. Basta cosi. The Dutch, of course, are still in the hunt, probably more as a matter of pride, and hopefully, I can say with the fingers-crossed dispassion of a jilted customer, revenge.

Regardless of the outcome, the birthplace of modern banking is again expressing its preference for the stone tablets and chisel approach to business. So don't be surprised if you encounter some day a raspy-voiced Dutch banker, veins bulging, hand gestures flying saying, "Let me tell you a story about an Italian bank..." At least hear him out.

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