May 30, 2018 - 5:55pm EST by
2018 2019
Price: 86.00 EPS 0.27 0
Shares Out. (in M): 15,860 P/E 9 0
Market Cap (in $M): 49,484 P/FCF 0 0
Net Debt (in $M): 0 EBIT 0 0
TEV (in $M): 0 TEV/EBIT 0 0

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Current Situation:
• President Sergio Mattarella vetoed euro-skeptic nominee Paolo Savona as Finance Minister and appointed Carlo Cottarelli (ex-IMF) as interim prime minister
• Risk off driven by fears of snap elections as early as September which could install a populist government
• New election could see Five Star or the League or an alliance win but unlikely that they will pursue an Ital-exit as most Italian voters are in favor of the euro
• Market is pricing a worst case election/referendum scenario in our view
Thesis on Intesa:
Intesa is the cleanest shirt amongst the Italian banks with the strongest capital buffer and the best NPL coverage
• Shares have sold off ~22% in the last 2 weeks
• Can maintain robust CET1 and dividend payout ratios even with NPL cleanup
• Trading at 0.8x book and 9-10x P/E
• Current dividend yield on the equity is 8.5%


I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise do not hold a material investment in the issuer's securities.


Re-rating of Italian risk once it is clear that Italy is not exiting the euro

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