Enrico Cuccia
Speech given by Enrico Cuccia in remembrance of Raffaele Mattioli at the Rotary Club of Florence on 24 November 1986
It was Raffaele Mattioli's daughter who invited me to recall the great man today, and while I have always shunned invitations of this kind, the keen gratitude and high esteem in which I hold Mattioli, along with the person who extended the invitation to me, have combined on this occasion to make it impossible for me to refuse.
I first met Raffaele Mattioli in the 1930s, which means that our friendship spanned a period of more than forty years. But this is not what I intend to talk about today, as it would mean discussing my relationship with Mattioli rather than the man himself, which I imagine would be of scant or no interest. I do, however, believe it could be useful to speak about the role he played in giving life to Mediobanca, although I do not deny that the appeal of even this topic may be limited to a few 'initiates'.
The idea of Mediobanca was born, or rather conceived, on a specific date, a few days after the August bank holiday in 1944, in BCI's Representative Office in Piazza Santi Apostoli in Rome. This was the first occasion on which Mattioli and I had spoken of the new creature.
Mattioli suggested the name "Unionbanca", for the reason that right from the very beginning the enterprise was seen not as something to be owned solely by BCI, but as a venture in which all three banks of national interest would be involved, along with five other public law institutions, plus Banca d'America e d'Italia, Banco di Santo Spirito, Associazioni Generali, RAS, INA and Bastogi. Fourteen shareholders in all, who would subscribe for a total share capital of Lit. 1,250m, with BCI and Credito each subscribing for Lit. 250m and Banco di Roma Lit. 150m to ensure that the three banks of national interest together held the majority interest in the new entity.
In August 1944 Italy was still split in two, and it was not possible to solicit the opinion of the then managing director of Credito Mr Brughera, whose involvement was seen as vital for the proposal to go ahead. During the winter of 1944-5, the Mattioli-Quintieri mission to Washington took place, and the work of planning and developing the project was put on hold, so to speak, until the following spring, when after Liberation Mattioli charged me to contact Mr Brughera in Milan. His response was enthusiastic, albeit with the odd misgiving over the list of prospective partners.
At this point a word on the rationale for the new enterprise is in order, in a market that had been ravaged by the war and was crippled by the financial problems associated with reconstruction. I will limit myself to recalling how sure Mattioli was that reconstruction would mean companies were able to resume production more quickly and generate adequate cashflow to pay off new investments over shorter periods of time. He felt, and events proved him right in this, that the structure of medium-term facilities should be more similar to short-term transactions than to long-term mortgages, both from the point of view of the applications procedure and of the security backing them. But what precisely did 'medium-term' mean? In the early stages Mattioli suggested a life of up to three years for both financing and funding transactions. The term for funding was subsequently extended to four years, which in the final version of Mediobanca's Articles of Association became five – or, to be precise, sixty months – for both lending and borrowing transactions.
Brughera's involvement was particularly important in the light of rejections from Banco di Roma and Banco di Napoli. Mattioli therefore decided to take the project forward as a joint venture with Credito, but it struggled initially to get off the ground.
In an early presentation to IRI, Mattioli said: "We have to avoid a scenario whereby ordinary banks end up becoming merchant banks, which in the economic climate following World War II could easily be disastrous". Mattioli and Brughera had by this stage both attained positions of responsibility in their respective organizations, at a time when BCI and Credito were functioning as 'mixed' banks. Mattioli's reference to 'merchant banks' here, rather than persuading his listeners of the case for Unionbanca in order to avoid repeating a bitter experience of the past, in fact merely persuaded them that Unionbanca's promoters were looking for a vehicle by which to secretly return to their former loves.
Incidentally, I remember one time while we were working towards setting up Mediobanca, Menichella greeted me with the phrase: "The Longobards are coming!" I was somewhat taken aback by this odd form of greeting, but he explained to me that this was one of Governor Bonaldo Stringher's favourite phrases when informed of an imminent visit by Joel or Toeplitz. I mention this to show that Menichella clearly associated Mediobanca with the kind of banking environment to which the 1929-34 crisis had represented a salutary wake-up call.
Despite the climate being clearly unfavourable to his initiative, Mattioli took the matter up with Governor Einaudi in a letter dated 27 August 1945, in which he reiterated his view that ordinary banks, although by that stage having their own staff experienced in extending credit, would be wise to avoid organizing their own individual medium-term credit divisions, but would be better off handing this type of transaction over to a separate entity. Mattioli added: "I have sought the opinion of Credito Italiano in the person of its Managing Director, and our joint decision (which is why the letter is signed by both Mr Brughera and myself) is that a solution of the latter type would be preferable"; by which he meant, obviously, Unionbanca.
Mattioli returned to the issue in a letter to Einaudi dated 8 September 1945. A meeting at the Bank of Italy followed, and on 15 September BCI sent a formal application to the Bank of Italy to set up Unionbanca. The application read thus: "Following a wide-ranging and lively discussion of the proposal, the Governor of the Bank of Italy has authorized us to refer to assurances given to us by him that he would in principle accept a proposal from us for our bank to set up an entity legally distinct from a similar entity which Credito Italiano would set up on its own behalf. But we take the liberty of reiterating our request".
Credito Italiano presented a similar request, albeit in more succinct form, to the Bank of Italy on 19 September 1945.
But faced with the obstacles which the project continued to encounter, especially from the central bank (Piccardi, the head of IRI, was in favour of the idea), Mattioli began to think that involving a group of non-Italian investors could be a key incentive in persuading the authorities to give the venture the go-ahead. To this end, he persuaded Felix Somary, a partner in Zurich-based investment house Blankart et Cie, to send him a letter dated 24 October 1945 stating that he was willing to commit half a billion lire to the setting up of an Italian bank (these were "internal lire" held by non-Italian nationals), and to grant the new entity credit in the form of five-year facilities of up to CHF 50m, i.e. Lit. 1,250m based on the exchange rate ruling at that time. This could subsequently be raised to higher sums depending on how the first transactions went, and Somary suggested trying to involve other non-Italian entities in the organization too. On 27 October, Mattioli wrote to Einaudi to inform him of the contents of Somary’s letter without telling him who had sent it, except to say it was from a "Swiss friend" who was a top-ranking figure in economic and financial circles in his country as well as an individual of considerable international standing. Mattioli concluded: "Faced with an offer of this kind, I fail to see how the considerations which cause you to see the issue in one light and the head of IRI to see it in another cannot fall."
Somary's letter obtained the desired effect and broke down Governor Einaudi's reluctance. However, it was deemed desirable that the venture be taken up by all three banks of national interest, so the authorities took measures to persuade Banco di Roma to reconsider its position in this regard.
The non-Italian group of investors was to take a 50% stake in the new bank's share capital, but at the critical stage Somary began to waver. Mattioli had lent heavily on managing director of UBS Mr Schaefer in his negotiations with Somary, and once Somary began to show signs of cooling, Mattioli looked into the possibilities offered by the fact that while the lira holding in Unionbanca was to be acquired by Blankart, the five-year credit facilities in Swiss francs were to be granted by UBS. Negotiations with Somary merely led to vague statements and delaying tactics, and negotiations with Schaefer also remained on hold.
On 7 November 1945, the general manager of the Italian Treasury announced that BCI, Credito and Banco di Roma would take part in the setting up of Unionbanca, and cleared the way for "non-Italian groups with funds denominated in Italian lire" to also take stakes which together would total less than half the new company’s share capital. "The said share capital shall be no less than Lit. 1bn."
In the meantime, Mattioli himself had made a significant amendment to the new bank's Articles of Association. Whereas in the first version of the text no mention was made among credit transactions of the possible acquisition of equity interests, a later draft included the following addendum to the bank's corporate objects: "to acquire and sell securities". Mattioli specified that in such transactions "the company may not invest an aggregate amount of more than one third of its share capital and reserves, or otherwise invest an amount representing more than 10% of the said share capital and reserves in securities issued by each individual company". Note that Mattioli gave no limit as to the percentage holding in the company whose stock was being acquired. This would be added in years to come. Again so as to avoid the possibility that Unionbanca could become a means for the three banks of national interest to creep back into investment banking through the back door, once incorporated the bank was requested in its Articles of Association to proscribe the possibility of receiving deposits from other credit institutions. Reasoning that it was not possible to ask non-Italian banking groups not to deposit funds, the obstacle was removed by the Board resolving to proscribe the raising of funds attributable to Italian credit institutions.
Once the bureaucratic formalities had been got out of the way, the venture was to be launched under the new name of Mediobanca, chosen only a few days before its incorporation scheduled for 28 or 29 March 1946.
But there was unexpected last minute opposition from the then Minister Corbino, who asked for "further amendments" to be made. Menichella was convinced the project would ultimately go ahead, and counselled against proceeding with incorporation regardless of the Minister's veto, as Mattioli wanted to do. And indeed, within the space of a few days the objections had been dealt with, and the new bank was incorporated on 10 April 1946, with BCI and Credito each having 35% shares and 30% subscribed for by Banco di Roma. Non-Italian investors only came on board ten years later in 1956, when Lazard and Lehman Brothers each took a 10% stake, a move that again was crucial to obtaining clearance for a major tranche of Mediobanca securities to be placed and listed on the market. But in April 1946 the fear that behind Mediobanca there lurked some kind of nefarious aspiration to resurrect the discredited 'mixed banks' gave rise to a ludicrous situation whereby Mattioli and Brughera were not allowed to join the Board of Directors of Mediobanca – an outcome which Mattioli accepted with wry humour. Only on 29 October 1947, more than eighteen months after the bank was incorporated, were Mattioli and Brughera finally invited onto the Board of Directors, when shareholders in General Meeting resolved to increase the number of Directors from five to seven.
It was Adolfo Tino who wrote the tribute to Mattioli which appeared in Mediobanca's Annual Report of 1973 following his death. It included the following statement: "After 'his' BCI, Mediobanca was the child that Mattioli most loved". This is absolutely true, but it was the love for a child whose growth and development showed the extent of Mattioli’s tenacity in overcoming the obstacles and diffidence which for more than a year and a half had threatened that child's very existence.