MILAN — In his first three years as chief executive of Banca Intesa, Corrado Passera changed almost three of every four of the bank’s 4,200 branch managers. He also devoted a large amount of his time to persuading his 60,000 employees that he had a credible plan for revamping what would to become the largest consumer bank in Italy.
That level of activity may now seem like a holiday to Mr. Passera, who, as Italy’s new minister of economic development and infrastructure, must tackle the economic malaise that hangs over the country and its 60 million residents.
The future of Italy’s huge public debt, the country’s ability to service that debt and, by extension, the long-term future of the euro ride on whether Mr. Passera can return the country to robust economic expansion after a decade in which annual growth averaged about 1 percent.
“Passera faces many obstacles, but the biggest one is the risk that Italy becomes hostage to interest groups that block change,” said Andrea Boitani, a professor of economics at the Catholic University of Milan.
“In Italy’s favor is that it seems there is the general desire to start afresh,” Mr. Boitani added. “This is important because countries begin to decline when interest groups get too strong and make it impossible to change and innovate. There is, of course, the added problem of Italy’s debt.”
The public debt, the highest in the world after those of the United States, Japan and Germany, is equivalent to about 120 percent of the country’s gross domestic product. By way of comparison, Germany’s debt is about 82 percent of G.D.P., France’s 85 percent and Greece’s 163 percent. Countries can lower that ratio by spending less and taxing more, or by increasing economic output.
Prime Minister Mario Monti, who is also the economics minister, will have the job of getting spending cuts and new taxes through Parliament. It is Mr. Passera’s task to lift G.D.P.
“If the government carries out necessary reforms and helps boost confidence, that could go a long way to facilitating growth,” said Marco Valli, chief euro zone economist at UniCredit Global Research in Milan. Italy is fortunate, he said, in that “you don’t have the structural problems of a place like Spain where the private sector is heavily indebted and has to tighten its belt.
“In Italy growth is low because the country is not very competitive,” Mr. Valli continued. “But if you make changes to the private sector the response can be big.”
Mr. Passera, who is fluent in English — far from typical among the Italian political class — declined to comment for this article and has not given any interviews since becoming minister. Over the past several years he has made clear what his grand vision for Italy is and has long maintained that lowering public debt and stimulating growth are not mutually exclusive.
A first important step, Mr. Passera wrote in an opinion article published last year in The Wall Street Journal, would be for Italy to invest €200 billion to €250 billion, or $267 billion to $333 billion at current exchange rates, in the next five to seven years on infrastructure. The investment could be made without increasing public debt if Italy used public funds already allocated but not yet spent, as well as European Union funding and private finance, he wrote.
Other important steps would include squeezing efficiencies out of public spending, addressing tax evasion and selling public assets.
Mr. Passera, 56, earned an M.B.A. at the Wharton School of the University of Pennsylvania before starting in 1980 at the consulting firm McKinsey Co. He then became general manager of CIR, the holding company of Carlo De Benedetti, the principal antagonist in the Italian corporate world of Silvio Berlusconi, the media mogul who stepped down as prime minister this month. Mr. Passera covered various jobs in the De Benedetti publishing empire and at Olivetti, the typewriter and computer maker owned by Mr. De Benedetti.
In 1998 Mr. Passera became chief executive of Poste Italiane, the state-owned postal service, and it is here that he earned the reputation as somebody willing to take on difficult challenges while betting on big ideas. He brought on Massimo Arrighetti, now chief executive of SIA, which sells technology used to facilitate electronic payments, to implement a plan to turn the postal service into a consumer bank.
Article source: http://www.nytimes.com/2011/11/29/business/global/turnaround-expert-takes-on-italy.html?partner=rss&emc=rss