By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
A procession of Italian industrialists and financiers slipped through the alleyways behind La Scala opera house two weeks ago to discuss the legacy of the man whose name adorns the piazza outside the building where they met: Enrico Cuccia. The group, ranging from a former Treasury minister to an iconoclastic fashion mogul, shared stories of the founder of Mediobanca, who’d passed away 14 years to the day. Yet for all the nostalgia that afternoon, absent was any obvious desire to turn back the clock to the days when Mediobanca was the unchallenged puppet-master of Italian business.
That’s surprising given the parlous state of corporate Italy. The uno-due punch of the financial and sovereign debt calamities has thrust the establishment into a profound crisis, one even more sweeping than the Tangentopoli corruption scandal that two decades ago sent dozens of Italy’s top businessmen and politicians into Milan’s San Vittore prison. The uniquely Italian form of capitalism conceived by Cuccia after World War Two is at last being consigned to history.
Though the revolution reshaping the nation’s economy is painful and prolonged, those with the most at stake know that Italy needs dramatic change. Deprived of the protections of the past – whether from the cash-strapped government in Rome or Mediobanca in Milan – Italian companies are at last being forced to play by the rules of global finance. Some 95 percent of the institutional investors who account for the bulk of trading on the Italian Stock Exchange are foreign. The survivors of this Darwinian selection will be the better for it.
Unlike the cyclical spikes in bankruptcy filings that typically accompany wrenching economic change in the United States, the evidence of Italy’s transformation is subtler, if wider-reaching. As companies pass the hat to investors beyond the Alps, they must transform their governance in ways that would have Cuccia turning in his grave on the banks of Lago Maggiore (assuming his body, stolen shortly after its 2000 burial, was ever in fact returned to its resting place).