Shares in Italy’s Intesa rise after reassurances on capital, paybacks

MILAN (Reuters) – Shares in Intesa Sanpaolo rose 3% in early trade on Monday after Italy’s top bank reassured investors on its capital buffers and ability to reward investors as planned, despite supervisory concerns over internal models to assess risks.

Intesa said late on Friday it would end the year with a core capital ratio of around 13% – from 12.4% at the end of September – and stay above the bank’s target of more than 12% through 2025.

That takes into account all the expected regulatory hits and a 1.7 billion euro ($1.85 billion) share buyback the bank has put on hold until the approval of full-year results, despite receiving a green light from the European Central Bank.

“We expect this to reassure the market on the group’s capital position and the effort to optimise it, and expect the group to continue on its generous capital return,” Citi analysts said.

Intesa shares fell on Friday after a Bloomberg report the bank was shedding as much as 20 billion euros in assets after the ECB took aim at its risk models, demanding higher weighting for loans.

Traders said investors worried about the bank’s ability to put through its generous capital distribution plans.

Intesa said it would reduce risk-weighted assets in the fourth quarter because of regulatory changes starting January.

($1 = 0.9175 euros)

(Reporting by Valentina Za, editing Federico Maccioni and Louise Heavens)