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The Italian government is planning to sell some publicly owned companies and assets to Cassa Depositi e Prestiti SpA to lower its public debt level and raise cash to pay government contractors, Corriere della Sera reported Monday, without citing any sources.
The plan appears similar to that pursued by former Economy Minister Giulio Tremonti, who often said he would like to turn the CDP--which the government controls--into an institution like Germany's KfW (KFW.YY).
KFW, for Kreditanstalt fuer Wiederaufbau, describes itself as a "promotional" bank and finances small businesses. Its debts are not consolidated in Germany's public finances, a model which if followed would allow Italy to reduce its public debt, currently at 120% of gross domestic product.
The Italian plan would be to use CDP to buy low-debt, cash-rich state enterprises such as SACE, the import-export bank, then leverage CDP's balance sheet to buy up to EUR50 billion in other assets, such as the treasury's stake in Enel SpA (ENEL.MI), Eni SpA (E) and Finmeccancia SpA (FNC.MI) as well as wholly owned enterprises such as the state television broadcaster and railway, the Milan-based newspaper said.
The treasury would use the proceeds to buy back existing sovereign bonds--now trading at a discount to face value--as well as to pay some of the government's EUR70 billion in arrears to its contractors or suppliers, Corriere said.
CDP is 70%-owned by the state and 30%-owned by some 65 non-profit banking foundations, so its ownership of any assets would allow the government to exercise influence over them, the paper noted.
The plan would require the Bank of Italy's approval as the CDP would have to use its own capital and comply with Basel III banking regulations, the paper added.
-Rome Bureau, Dow Jones Newswires; +39 06 6976 6920