IntesaBci pulls back from credit derivatives; overhauls risk

Italy’s largest bank, IntesaBci, plans to downsize its credit derivatives business as part of a dramatic restructuring of its business.

Giovanni Bazoli, chairman of the Italian bank, said this week that credit derivatives were not a core business and that the downsizing would help improve IntesaBci's asset quality and its overall risk profile.

The bank has been by far Italy's largest player in the credit derivatives business, and the scale of its dealings over recent years has led many industry analysts to rank it among the top five credit derivatives dealers, in volume terms, in the world.

But IntesaBci's balance sheet has been hit by exposure to many of the high-profile international credit risk events of the past 12 months, including Enron, WorldCom and Swissair, as well as Argentina's debt crisis.

Bazoli's plan also calls for the "strong reinforcement of the activities of the credit and risk management departments of the group". In addition, the bank is pulling out of Latin America.

IntesaBci's strategic plan now focuses on domestic retail business in Italy.