Bank Of Italy Blocks Lehman-Mediobanca Deal On Ferrari

MILAN October 28,2002; Dow Jones reported that The Bank of Italy has blocked a deal in which Mediobanca SpA would sell 6.5% of its 21.5% stake in luxury sportscar maker Ferrari SpA to Lehman Brothers Holdings Inc., Mediobanca said in its first-quarter earnings report Monday.

"(The bank's investment portfolio) includes the reacquisition of the 21.5% ownership of the Ferrari stake as indicated by the Bank of Italy," Mediobanca said.

This means that an agreement with Lehman Brothers to sell 6.5% in order to meet Italian regulation has been nullified.

The bank said, however, that it intends to lower its stake to 15%.

The Bank of Italy, which regulates the country's banking system, does not permit financial institutions to hold more than 15% in industrial companies.

In June, Mediobanca led a consortium to acquire a 34% stake in Fiat SpA's Ferrari unit. In doing so, the bank acquired a 21.5% direct stake, breaching Italian regulation.

Then in September, it sold 6.5% to Lehman Brothers in order to fall in line with regulations, but reserved the right to reacquire the stake at a later date. This operation has been at the center of criticism from key Mediobanca shareholders as a temporary measure to appease regulators, as opposed to a permanent solution.

Unicredito Italiano SpA and Capitalia SpA have been critical of Mediobanca Chief Executive Vincenzo Maranghi for having disregarded the bank's own governance codes and Italian regulation. They recently led a failed attempt at removing the bank's chairman, Francesco Cingano, in order to appoint one who, in their view, would better balance Maranghi.