ROME: Italy’s post office is cutting costly mail delivery and expanding its lucrative financial and insurance business as it gears up for a long-awaited share sale that is set to be the country’s biggest privatisation in a decade.
The market listing of Poste, due in October, is a key plank of Prime Minister Matteo Renzi’s efforts to revive state asset sales to help cut Italy’s 2.2 trillion euro ($2.4 trillion)public debt and make good on pledges to reduce taxes.
It also fits Renzi’s longer-term agenda of making creaking, over-staffed institutions more competitive to support a fledgling economic recovery.
The treasury hopes to raise as much as 4 billion euros from the sale of a 40 percent stake in Poste Italiane. Next on its list is rail company Ferrovie dello Stato, which could go public in 2016.
The privatisation plan has major implications for Italy’s industrial landscape, namely placing key parts of communication and transport network under greater market pressure,” said Raj Badiani, economist at IHS Global Insight.
Long a byword for public sector inefficiency, the 153-year old post office has grown into a conglomerate, which in 2014 made 85 percent of its revenues from insurance and financial services. Postal services accounted for just 15 percent.
While its delivery business has shrunk in the face of competition from electronic communications, Poste has taken advantage of the public’s loss in confidence in the banking sector during the global financial crisis.
It manages 460 billion euros in postal savings deposits, current accounts and insurance products — more than Italy’s No.3 and 4 banks put together. Its network of 13,000 branches is nearly three times that of Italy’s top bank Intesa Sanpaolo.
Yet with a workforce of 143,000 that makes it the country’s biggest employer, and the presence of the state which will remain in the driving seat despite the share sale, Poste has its work cut out as it seeks to attract return-hungry investors.
