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Italy: Problems, Consequences and Recommendations
Davide Serra
Algebris Investments (UK) LLP is Authorised and Regulated by the Financial Conduct Authority
2014 Private & Confidential. Algebris Investments, 7 Clifford Street, London, W1S 2FT, United Kingdom.
Agenda
A. Problems
B. Future consequences
C. Recommendations
2
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0%
40%
80%
120%
160%
200%
240%
280%
320%
360%
400%
440%
480%
520%
560%
600%
640%
680%
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%Debt/GDP Italy avg. Growth OECD avg. growth
A. The problem: High debt, low growth
GDP Growth % - 5 years rolling average vs. Debt / GDP %
Source: OECD, ISTAT
First Republic Second Republic
3
Deb
t/G
DP
Third
Republic
Debt/GDP now
at 130%+
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Why does debt increase and growth decrease?
1. Chronic tax evasion
2. The tax evasion party
3. Overly complex tax system
4. High public expenditure vs. poor public services
5. High cost for public employees
6. High pension costs
Debt / GDP Growth
1. Low business competitiveness
2. Low market share in key sectors
3. High tax rates
4. Corruption
5. Low labour productivity
6. Low labour participation
7. High energy costs
8. Inefficient legal system
9. Low R&D investments
4
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Why debt increases: 1. Tax evasion...
0.4
1
1.3
2.2
2.4
3.5
3.9
4
4.5
6.2
6.5
7.9
11.2
12.1
17.4
Norway (2005)
Netherlands (1995)
Australia (2001)
Canada (2008)
Denmark (2003)
Belgium (2002)
France (2008)
Ireland (1998)
Sweden (2005)
United States (2005)
Austria (2004)
United Kingdom (2009)
Spain (2000)
Mexico (2003)
Italy (2012)
Mario Monti, Aug 2012: Tax evasion produces a huge damage in the perception of our country abroad. I believe that Italy is in this difficult position especially because of this..
Source: Una nota sulle determinanti dell'economia sommersa, Confcommercio, May 2011
5
The shadow economy [% of GDP]
Shadow economy determinants:Public expenditures efficiency perception
Ease of paying taxesEfficacy and efficiency of the legal system
Average tax rate
Little tangible improvement has been made!
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17.9%
19.0%
18.6%
19.3%
19.2%
20.0%
19.0%
19.2%
19.1%
19.7%
18.6%
18.5%
18.1%
17.8%
17.5%
17.2%
17.5%
17.5%
17.8%
17.3%17.4%
17.4%
17%
18%
18%
19%
19%
20%
20%
21%
1992 1995 1998 2001 2004 2007 2010 2013
...never challenged
Small improvements in 20 years
Source: Fiscalita ed economia sommersa, Confcommercio, Luglio 2013
6
The shadow economy [% of GDP]
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117 117126
149 152
13 1314
14 13
102 94 79 5562
191 185189
193
195
0
50
100
150
200
250
300
350
400
450
2008 2009 2010 2011 2012
Tax
Inco
me
(b
n)
Indirect Taxes Corporates&Other Self-employed Employees
Self-employed 32%Employees 68%
Self-employed should pay at least 45b more, 3% of GDP
423 409 412407
In 20 years this caused 60% of Debt / GDP
Source: ISTAT 2010Source: MEF
Total:
7
Total Tax Income
2%
3%
3%
4%
5%
5%
6%
7%
7%
8%
9%
10%
10%
10%
11%
12%
14%
15%
18%
19%
20%
22%
32%
36%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Romania
Lussemburgo
Lettonia
Estonia
Portogallo
Germania
Lituania
Regno Unito
Finlandia
Cipro
Danimarca
Irlanda
Bulgaria
Austria
Slovenia
Paesi Bassi
Ungheria
Svezia
Belgio
Repubblica Ceca
Polonia
Spagna
Italia
Grecia
Self-employed [% of total]
2. The Tax Evasion Party
412
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3. Overly complex tax system
15 Payments
269 hours per year
720 potential tax reliefs to be checked
8 Payments
110 hours per year
few tax reliefs
Source: The World Bank, IFC Doing Business 2013
8
16
18
34
56
69
72
75
131
UK
Switzerland
Spain
Average OECD
US
Germany
Belgium
Italy
Ease of paying taxes (higher is worse)
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4. High public expenditure vs. low public services
Source: Eurostat 2011
9
Public expenditure [% of GDP] Italy Public expenditure [% of GDP] Average DE, FR, ES, UK
7.5%
5.9%5.6%
4.1%
2.0%1.8%
Health Generalpublic
services
Education Economicaffairs
Publicorder and
safety
Defence
Average DE, FR, ES,UK
7.6%
8.3%
4.5%
3.8%
1.9%1.4%
Health Generalpublic
services
Education Economicaffairs
Publicorder and
safety
Defence
Italy
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Population Public employees
Public employees vs. Labour force
Expenditure per employee000
Expenditure for public wages/GDP
65.3 millions 5,493,200 20.9%1 47.8 13.2%
81.8millions 4,434,000 10.5% 45.0 7.7%
63.3 millions 5,719,000 17.9% 33.8 10.8%
60.8 millions 3,417,000 13.3% 49.5 10.6%
46.2 millions 3,136,100 12.9% 39.4 11.1%
5. High cost for public employees...
In 2012 public expenses on
employees declined 1.2% for the first time in 12 years
Still FR/DE/ES on average spend
11% less than Italy for every employee,
while UK 26%
1 Official data updated as of 2011Source: Relazione 2012 sul costo del lavoro pubblico, Corte dei Conti, Eurostat
10
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..and poor public services..
Source: Confcommercio
Institutions
Healthcare
Education
Infrastructures
From 2000 to
2010 little
improvement
11
0 1 2 3 4 5 6
Mexico
Italy
Slovakia
Greece
Slovenia
Spain
Cyprus
Portugal
Ireland
UK
Estonia
Norway
Canada
Belgium
Holland
Japan
Sweden
Denmark
Germany
Finland
End 2000 End 2010
Perception of public services (higher is better)
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...waste 1.6% GDP each year
Average expenditure per public
employee in
UK, ES, DE, FR
41,200
Average expenditure per public
employee in ITA 48,400
If Italy lowered expenditure and
spent the same amount as the
average:
~25b savings,
~1.6% of GDP
Source: Relazione 2012 sul costo del lavoro pubblico, Corte dei Conti, Regione Lombardia, Provincia di Milano
Province of Milan:
13 executive councillors: average compensation 71,794/year
45 province councillors: average compensation 27,770/year
38 executives: average compensation 110,841/year
Lombardia Region:
81 regional councillors: average compensation 124,621/year
163 executives: average compensation91,149/year
50 directors: average compensation160k/year
12
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6. High pension cost
Source: OECD Pensions Outlook 2012
13
Pensions expenditure [% of GDP]
4.6%
7.7%
10.1%
10.8%
14.6%
15.3%
United States
UnitedKingdom
Spain
Germany
France
Italy
2010
4.8%
8.2%
14.0%
13.0%
15.1%
15.7%
United States
UnitedKingdom
Spain
Germany
France
Italy
2050
Average UK, ES, DE, FR: 10.8% of GDP
Italy's costs would be 70bn (4.5% of GDP) lower if it spent like its neighbours!
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Recap: Why does debt increase?
Tax evasion = 3-4% GDP
Public expenditure and
wages = 1.6% GDP
Pensions = 4.5% GDP
~10% of GDP wasted
annually
14
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Second problem: Growth
1. Italy is not competitive...
Italy ranks 49th in the WEF 2013 Global Competitiveness
Index
Source: 2012 World Economic Forum
#49 Competitiveness
#9 GDP
#5 Debt
15
GCI 2012-2013
Country/Economy Rank Score
Switzerland 1 5.7
Singapore 2 5.6
Finland 3 5.5
Germany 4 5.5
United 5 5.5
Sweden 6 5.5
Hong 7 5.5
Netherlands 8 5.4
Japan 9 5.4
United 10 5.4
Norway 11 5.3
Taiwan 12 5.3
Qatar 13 5.2
Canada 14 5.2
Denmark 15 5.2
Italy 49 4.4
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2. Low market share in key sectors: High Tech, Cheap
Manufacturing, Commodities
25.8%23.7%
21.3%18.1%
15.0% 13.8%
7.4% 6.4%
China France United Kingdom United States Germany Euro Area Italy Spain
Note: Products with high R&D; aerospace sector, computer, pharmaceuticals, scientific and electronic equipment Source: The World Bank 2012
1,923 1,856
1,084
614
308 282 268 231
China US Japan Germany Italy Brazil France UK
Source: The Manufacturers Organization, 2012
16
Most important manufacturing countries [$ bn , current prices]
% High Tech exports in manufacturing sector 2011
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28% 27% 28%29%
11%
17%
4%5%
Spain Italy UnitedKingdom
Germany France
..in early 2000s everybody studied law!
Until 2005 few students graduated in Science and Engineering vs. Law
Source: Eurostat
1998
26%
23%22%
31%
26%
6%
3% 4% 4%
8%
Spain Italy UnitedKingdom
Germany France
2010
Engineering and ScienceLaw
17
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3. Too high tax rates
Tax pressure % of GDP
20.823.1
26.327.528.1
34.737.337.938.739.0
40.543.343.643.944.4
46.446.7
48.849.1
52.452.853.1
57.358.6
65.768.5
Luxembourg
Cyprus
Ireland
Denmark
Bulgaria
Slovenia
United Kingdom
Latvia
Spain
FinlandNetherlands
Portugal
Poland
Lithuania
RomaniaGreece
Germany
Slovak Republic
Czech Republic
Hungary
Sweden
Austria
Belgium
Estonia
France
Italy
Profits taxes
Labour taxes
Other taxes
Profit taxes and social contributions rates among the highest in the world
Italy allowed tax evasion to small corporations and squeezed the big
ones
Corporations dont grow and move elsewhere!
Source: The World Bank, IFC Doing Business 2012
18
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2.4
2.5
2.5
2.9
3.7
4.2
4.4
4.5
4.5
4.9
5.1
5.4
5.6
5.7
Slovak Republic
Grecia
Italia
Portogallo
Spagna
Belgio
Francia
Giappone
Stati Uniti
Germania
Danimarca
Regno Unito
Norvegia
Svezia
4. Corruption
Source: World Economic Forum, Confcommercio 2013
19
Irregular payments and bribes index [1 = worst , 7 = best]
Only Greece and Slovak Republic
worse
Deep dive from 2000s score of 4.4
Only recently Montis government introduced measures to prevent and stop
corruption in the public administration
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5. Low labour productivity...
Source: Eurostat 2013
Distance from main EU countries widened in the last year (+3%)
69.7
52.7
45.4 4542.4
39.5 39.3
32.2 32.1 31.3
20.316.9
20
Euro produced per hour in each countrys economy
Only Portugal, Spain and Greece worse than Italy
Northern Core countries way more productive
Average FR, DE, UK, ES = 39.6
Italy = 32.2 (-23% per hour)
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...which doesnt legitimize recent wage increases
Last 10 years:
Wages +38%
Productivity +12%
Italy is losing competitiveness and market
share in manufacturing sector
Source: IMF, CSC, Global Insight
-4%
-1%
-1%
-1%
0%
0%
0%
0%
1%
8%
United States
Italy
Germany
France
Japan
South Korea
Russia
India
Brazil
China
21
Cumulated % change 2000-2011 in manufacturing Market Share 2007-2011 in manufacturing sector
Germany France Italy
Productivity +23% +23% +12%
Wages +22% +30% +38%
unit labour cost +1% -7% -26%
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6. Low labour participation
=
77.1%
76.3%
74.1%
71.8%
71.0%
63.7%
Germany
UnitedKingdom
Spain
EU 27
France
Italy
71.7%
70.3%
67.9%
66.7%
65.6%
53.5%
Germany
UnitedKingdom
Spain
France
EU 27
Italy
Source: Eurostat 2012
22
% labour participation between 15 and 64 % woman labour participation between 15 and 64
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7. High energy costs...
0.07
0.090.10 0.10
0.11 0.11
0.13
-43
-14
-12
-10
11
20
44
Italy
EU 27
United Kingdom
Belgium
Spain
Germany
France
Source: Enerdata 2012 Source: Eurostat 2012
23
Deficit production-consumption (TWh) Electricity prices for the Industry (/kWh)
+37% price Vs EU 27 average
Sticky prices, highly dependent from long term agreement
with foreign suppliers more than from demand/supply
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...due to less efficent production
74.9%
49.7%
27.5%22.8% 20.4%
16.3%
3.5%0.0%
In 2011 a second referendum abolished any attempt to build nuclear power plants
From 2007 production from renewable sources has almost doubled under poorly designed public subsidies
Source: Enerdata 2012, Terna 2010
24
Nuclear power production [% on the gross production] Renewable energy production [% on the gross production]
32.8%31.4%
17.1%
13.7%12.4%
4.5% 3.9% 3.6%
Cost of electricity up ~11% in two years Firms spend ~10-15% more on electricity than in the other EU countries; in a cost cutting economy many decides to move abroad (ie. Alcoa)
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8. Ineffective legal system
26
28
28
29
30
30
32
32
34
35
36
38
39
40
41
43
Belgium
Australia
UK
France
Germany
Sweden
Portugal
United States
Norway
Denmark
Canada
Mexico
Greece
Spain
Italy
Cyprus
Source: Fiscalita ed economia sommersa, Confcommercio, Luglio 2013
3.5
3.6
4
4.1
4.3
4.8
4.8
4.9
5.5
5.6
5.6
5.7
5.8
5.8
5.9
6
6.1
Slovakia
Italy
Slovenia
Greece
Mexico
Portugal
Denmark
Spain
Sweden
Canada
France
US
Japan
Norway
Germany
UK
Australia
25
Legal System Efficiency Index Average number of days before sentence is pronounced
ITALY
1210 Days
DE, UK, ES, FR
530 Days vs.
Number of court iterations needed to observe a contract
Will the legislative decree on liberalization (January 2012) enhance the situation with the introduction of companies
courthouses?
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...also bankruptcy procedures take years
Source: Fiscalita ed economia sommersa, Confcommercio, Luglio 2013
0.4
0.6
0.8
0.9
0.9
0.9
1
1
1.2
1.5
1.5
1.8
1.8
1.9
2
2
4
Ireland
Japan
Canada
Belgium
Finland
Norway
Denmark
UK
Germany
Spain
US
Italy
Mexico
France
Greece
Portogallo
Slovacchia
26
Duration of a bankruptcy process [years]
~2 years to go bankrupt
Montis executive modified the bankruptcy law in the effort to reveal a potential insolvency in advance and ease a creditor
debtor agreement:
Introduction of the Concordato preventivo
Higher protection to the economic activity
Intervention to ease banks financing in a debt
restructuring process
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9. Little R&D investments
2.88%
2.24%
1.77%
1.33%
1.25%
Germany
France
UK
Spain
Italy
Source: Eurostat 2012
% Enterprises % Government
45% 42%
45% 32%
54% 37%
64% 30%
Source: OECD 2010/2011
27
R&D expenditure % GDP
45% 49%
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B. Future consequences:
High debt + low growth = no new births
-2.71
-0.87
1.52
2.94
3.87
Germany Italy France UnitedKingdom
Spain
0
1,000
2,000
3,000
4,000
5,000
6,000
-6
-4
-2
0
2
4
6
8
10
12
1960 1970 1980 1990 2000 2010
Debt (bn) Natural Growth Rate
Source: CIA World Factbook 2012 Est., ISTAT 2011
28
Natural growth rate [rates per 1000pp] Historical data: Natural growth rate (per 1000pp)
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No jobs for young people Youth Unemployment Sky-rocketing
12%
8%11%
14% 16%20%
9%
20%18%
23%
8% 8%
16%
21%23%
25%
30%
35%
53%55%
Germany Japan US UK EU 27 France Ireland Italy Spain Greece
2007 2012
Source: Eurostat 2012
29
Youth unemployment % (19-25 years old)
In 5 years almost doubled
2013 Estimate: 41.6%
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Unfair system for present and future generations
Source: OECD Pensions Outlook 2012
0
10
20
30
40
50
60
70
80
1949 1958 1971 1983 1989 1993 1999 2002 2010 2020 2030 2040 2050
First Republic Second Republic
1983: Retirement at 55
2050: Retirement at 70
30
Pensionable age progression (men)
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...firms will leave the country...
High spreads on funding affect directly firms competitiveness
Scenario 1: Increase in cost of funding for 3 years
+250bps
42% interest expense increase33% less profitNet income margin drops from 2.2% to 1.5%
Source: Mediobanca Research (MBRES), Algebris Investments (UK) LLP Deindustrialization of Italian
firms
31
bn 2012 2012Scenario
+250 Delta %
Net Revenues 646 100.0% 100.0% 0%
Gross profit 125 19.4% 19.4% 0%
EBITDA 58 9.0% 9.0% 0%
EBIT 30 4.6% 4.6% 0%
Interest expenditures (20) (3.1%) (4.4%) 42%
Interest proceeds 24 3.8% 3.8% 0%
Earnings before taxes 34 5.3% 4.0% (25%)
Net income 15 2.2% 1.5% (33%)
Debt / EBITDA 5.5x
Interest expense/ Financial Debt 6.0%Additional Spread 2.5%
Interest expense/ Financial Debt 8.5%
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...Italian families will lose wealth...
32
2,713 2,713 2,713
5,9264,868
4,130
2010A Scenario 1 Scenario 2
Real Estate Net cash
Scenario 1
+100 bps
spread
Scenario 2
200 bps
spread
2010A
7,581 6,8438,639
-12% -21%
mm 2010A Scenario 1 Scenario 2
Cash and marketable
securities 3,600 3,600 3,600
Debt -887 -887 -887
+ Real Estate 5,926 4,868 4,130
%Growth -17.9% -30.3%
Net Wealth 8,639 7,581 6,843
%Growth -12.2% -20.8%
Source: Equita Sim, Algebris Investments (UK) LLP
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New Government, New Era?
...Prime Minister Renzi has committed to 1 key reform per month..
Target: 15th place in the Doing Business index by 2018
Is this a precondition for a Third Republic?
33
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C. Recommendations
1. Reform fiscal system
Simple and digital tax system
Remove cash
Incentivise corporations
2. Reduce public expenditure
3. Invest only where there is a real prospect of success
4. Reform legal system
34
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1. Simple and digital tax system
Simple tax regulations
Unification of minor taxes and referral to a single Tax Authority
Efficient online systems
Optimization of tax reliefs
Switzerland UK SpainOECD High
IncomeUS Germany Belgium Italy
Payments (number per year) 19 8 8 12 8 9 11 15
Time (hours per year) 63 110 167 176 175 207 156 269
Profit tax (%) 8.9 22.2 1.2 15.5 27.6 18.9 5.4 22.9
Labor tax and contributions (%) 17.7 10.2 36.8 22.8 10 21.9 50.8 43.4
Other taxes (%) 3.6 3.1 0.7 1.7 9.1 5.9 1.5 2.0
Total tax rate (% profit) 30.2 35.5 38.7 40.0 46.7 46.8 57.7 68.3
Source: World Bank 2012
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A radical reform is needed... ...to enhance the actual highly fragmented system
Three different VAT rates (21%, 10% and 4%) applied upon the type of
good/service
The housing tax IMU, introduced in 2013 and already subject to strong
opposition from the centre-right party
IRPEF, IRAP, INPS among the most important taxes
Algebris Investments (UK) LLP is Authorised and Regulated by the Financial Conduct Authority
2014 Private & Confidential. Algebris Investments, 7 Clifford Street, London, W1S 2FT, United Kingdom.
1. Cash removal = an efficient way to fight tax evasion
Source: Visa, A.T. Kearney 2013
36
Algebris Investments (UK) LLP is Authorised and Regulated by the Financial Conduct Authority
2014 Private & Confidential. Algebris Investments, 7 Clifford Street, London, W1S 2FT, United Kingdom.
In 4 years Shadow Economy
vs. GDP improved 5%
For Italy a similar outcome
could add 20b tax income,
1.5% of GDP
Debit cards may be used
instead of credit cards
1. The case of South Korea
8
10
12
14
16
18
20
22
1990 1993 1996 1999 2002 2005 2008
Tax system reform 98-99
Deduction of credit card expenditures from tax bill
Credit card receipts participate to a national lottery game
Source: Myongji University, Algebris Investments (UK) LLP
63.6
493.8
1998 2010
57% of total
consumption
37
Korea: The Shadow Economy % of GDP
Credit card payments in South Korea (tr KRW)
Algebris Investments (UK) LLP is Authorised and Regulated by the Financial Conduct Authority
2014 Private & Confidential. Algebris Investments, 7 Clifford Street, London, W1S 2FT, United Kingdom.
Lower taxation on corporations and employees (2% of GDP) and raise taxation on financial income
1. Stimulate investments in corporations: reduce
the tax pressure...
12.5%
20%
=
50-60%Corporations
Financial assets
50%Employees
Government securities
Recommendation
-1% GDP 16bn
~+1% GDP 10bn
~
-1% GDP 16bn
The missing 10-15bn will be retrieved from the reduction of both tax evasion and public expenditure
-
+
-Tax Rate
30%
40%
40-50%
Optimal
Source: Algebris Investments (UK) LLP
38
Algebris Investments (UK) LLP is Authorised and Regulated by the Financial Conduct Authority
2014 Private & Confidential. Algebris Investments, 7 Clifford Street, London, W1S 2FT, United Kingdom.
2. Reduce public expenditure
Widespread Spending Review Disposal of government assets
Real Estate
Holdings in listed companies
Capitalization of concessions
70-80bn
40bn
30bn
Debt
Interest expenditure
Growth
Radical rationalization of public expenditure
Reduction of managers and executives in public companies
Increase of public employees productivity
Waste
Services
Source: Algebris Investments (UK) LLP , Cassa Depositi e Prestiti
39
Algebris Investments (UK) LLP is Authorised and Regulated by the Financial Conduct Authority
2014 Private & Confidential. Algebris Investments, 7 Clifford Street, London, W1S 2FT, United Kingdom.
2. A concrete example..
Source: Regione Lombardia, Algebris Investments (UK) LLP
40
President and
councillors
Province of Milan
13 people
70k each
Board of the
province
47 people
22k each
Executives
48 people
110k each
..6.7 millions only for their
wages..
..And 108 politicians and
executives..
Headquartered in San Babila
Centre of Milan
Real estate here is valued
20k/m
..and there is a huge waste of
resources due to poor
energy efficiency of old
buildings..
Algebris Investments (UK) LLP is Authorised and Regulated by the Financial Conduct Authority
2014 Private & Confidential. Algebris Investments, 7 Clifford Street, London, W1S 2FT, United Kingdom.
1. Focus on Education and Research to revive manufacturing sector and retrieve competitiveness
3. Invest only where there is a real prospect of success
Energy
Transportation
Defence
Agro industrial
Telecommunications
Source: EUROSTAT, IMF, Confindustria, Algebris Investments (UK) LLP
Machinery and equipment
Metallurgy
Automotive
Chemicals
Electronic devices
Pharmaceuticals
Made in Italy
No lawyers and politicians
2. Focus on exports
Scientists and Engineers
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Algebris Investments (UK) LLP is Authorised and Regulated by the Financial Conduct Authority
2014 Private & Confidential. Algebris Investments, 7 Clifford Street, London, W1S 2FT, United Kingdom.
4. Reform legal system
Source: Algebris Investments (UK) LLP
42
Fairness
Timing
Simplicity
Organizational restructuring
Reorganisation of law offices following best
European and national practices (i.e. Torino)
Digitalisation of the whole law system
Geographical redistribution of law offices
Improve business competitiveness
Focus on post-sentence execution to
preserve companies rights
Strengthen credit recovery mechanism
making it possible to collect credits from
people (or ad hoc companies) close to the
person/company directly involved in the
sentence
Introduce severe anti-corruption laws
Algebris Investments (UK) LLP is Authorised and Regulated by the Financial Conduct Authority
2014 Private & Confidential. Algebris Investments, 7 Clifford Street, London, W1S 2FT, United Kingdom.
Disclaimer
This document is issued by Algebris Investments (UK) LLP. It is for private circulation only. The information contained in this document is strictly confidential and is only for the use of theperson to whom it is sent. The information contained herein may not be reproduced, distributed or published by any recipient for any purpose without the prior written consent of AlgebrisInvestments (UK) LLP.
Algebris Investments (UK) LLP is Authorised and Regulated in the UK by the Financial Services Authority. The information and opinions contained in this document are for backgroundpurposes only, do not purport to be full or complete and do not constitute investment advice. Algebris Investments (UK) LLP is not hereby arranging or agreeing to arrange any transaction inany investment whatsoever or otherwise undertaking any activity requiring authorisation under the Financial Services and Markets Act 2000.
This document does not constitute or form part of any offer to issue or sell, or any solicitation of an offer to subscribe or purchase, any investment nor shall it or the fact of its distributionform the basis of, or be relied on in connection with, any contract therefore.
No reliance may be placed for any purpose on the information and opinions contained in this document or their accuracy or completeness. No representation, warranty or undertaking,express or implied, is given as to the accuracy or completeness of the information or opinions contained in this document by any of Algebris Investments (UK) LLP, its members, employees oraffiliates and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions.
This document is being communicated by Algebris Investments (UK) LLP only to persons to whom it may lawfully be issued under The Financial Services and Markets Act 2000 (FinancialPromotion) Order 2001 including persons who are authorised under the Financial Services and Markets Act 2000 of the United Kingdom (the Act), certain persons having professionalexperience in matters relating to investments, high net worth companies, high net worth unincorporated associations and partnerships, trustees of high value trusts and persons who qualifyas certified sophisticated investors. This document is exempt from the prohibition in Section 21 of the Act on the communication by persons not authorised under the Act of invitations orinducements to engage in investment activity on the ground that it is being issued only to such types of person.
The distribution of this document may be restricted in certain jurisdictions. The above information is for general guidance only, and it is the responsibility of any person or persons inpossession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction.
Past performance is not necessarily a guide to future performance. The strategy employed may result in the NAV exhibiting a high level of volatility and so is suitable for professionalinvestors only.
Algebris Investments (UK) LLP, 7 Clifford Street, London W1S 2FT, UK. Company registration no.:OC319392.
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