CEO, Banca Intesa
Born: December 30, 1954, in Como, Italy.
Education: Bocconi University, BA; Wharton School, University of Pennsylvania, MBA.
Career: McKinsey and Company, 1980–1985, senior engagement manager; CIR, 1986–1990, chief operating officer; Arnoldo Mondadori Editore, 1990–1991, chief operating officer; Gruppo Espresso-Repubblica, 1991–1992, deputy chairman and CEO; Olivetti, 1992–1996, managing director and co-CEO; Banco Ambrosiano Veneto, 1996–1998, managing director and CEO; Poste Italiane, 1998–2002, managing director and CEO; Banca Intesa, 2002–, managing director and CEO.
Address: Via Monte di Pieta, 8, Milano 20121, Italy; http://www.bancaintesa.it.
■ During the 1990s and early 2000s Corrado Passera became one of Italy's best-known and most successful executives despite his young age. His claim to fame was his ability to rescue failing companies and restore them to profitability and efficiency. He successfully revitalized such companies as Olivetti, an IT firm; Poste Italiane, the country's postal system; and Banco Intesa, Italy's largest bank. Such was his reputation that when a company was in need of help, Passera's name inevitably came up as the person to save it.
Passera was born in Como, Italy, in 1954 and obtained a degree in business administration from Bocconi University in Milan, graduating with first-class honors. He later received his MBA from the prestigious Wharton School of the University of Pennsylvania in Philadelphia. He began his career in 1980 with the consulting firm McKinsey and Company, where he served as a senior engagement officer. Passera then went on to become chief operating officer at CIR from 1986 until 1990. He then held the same post at Arnoldo Mondadori Editore from 1990 until 1991.
After 1991 Passera worked as CEO at several Italian companies. From 1991 to 1992 he was chief executive at Gruppo Espresso-Repubblica. In 1992 he left that post to take the coCEO position at Olivetti, which had become Italy's leading information technology company. Olivetti was suffering though difficult financial times, and Passera was charged with turning the company around. Along with Olivetti's chairman, Carlo DeBenedetti, Passera drew up a recovery strategy for the troubled firm. Among the problems he faced at Olivetti was the creation of a single European market and ever-changing technology, which made it difficult for the company to define what it should do. He would soon develop a reputation as an expert in turning around companies in trouble.
In a speech at the 1995 World Economic Forum, Passera outlined the problems of companies like Olivetti. In the presentation, which the Economist (May 20, 1995) called a "brilliant analysis," Passera proposed a three-part strategy to reengineer the company. First, he wanted to restructure the company by cutting the workforce by 40 percent and removing layers of management. Second, Passera sought to refocus Olivetti by expanding in selected businesses, such as ink-jet printers. In the past the firm had tried to do too much in too many different areas. Third, he sought to reinvent Olivetti by moving in new directions, such as cellular telephones. The company had once focused on making manual typewriters and later moved into producing computers. Passera wanted to make Olivetti into a more service-oriented company, focusing on Omnitel, its cellular phone division.
In 1996 rumors circulated that Passera had received another job offer and that he might leave Olivetti. The company initially denied the reports but eventually admitted that Passera had received an offer from Banco Ambrosiano Veneto, one of Italy's largest private banks. Passera decided to accept the position as managing director and CEO at the bank.
In 1998 the Italian government began to overhaul the country's postal system, which was costly and inefficient. The government transformed the postal service from a public sector department to a shareholding company. The government still was the only shareholder, but the legal change opened the door for private investment in the postal system. Also, for the first time, Poste Italiane would have a CEO. Italian Prime Minister Romano Prodi and Treasury Minister Carlo Azeglio Cianpi decided to offer the job to Passera. Passera recounted to the Financial Times that he "had just set up an Internet bank and could have made a fortune. But then I received a conference call from Cianpi and Prodi offering me this job. I couldn't say no. Sometimes one has to make idealistic choices" (March 1, 2002).
When Passera took over the postal system, it was losing large amounts of money. In 1997 losses amounted to $441 million. It was the most inefficient postal system in Europe, known for its slow delivery times. Passera admitted to the Financial Times that the job would be "very difficult and demanding" (March 2, 1998). He quickly announced layoffs, the use of automation, and the addition of electronic services. Passera told BusinessWeek that "we will reorganize like any private-sector company" (August 17, 1998). It would be his ability to transform an extreme case such as Poste Italiane that would give Passera his reputation for corporate turnarounds.
Passera told the Financial Times that "when I got there we had two months' worth of cash for salaries, negative net equity and no technology. No one believed in the future. I had to make sure the government was behind us and start investing in people" (March 1, 2002). He implemented a five-year business plan for Poste, and he hired tough managers from outside the postal service. Passera invested in information technology and modern sorting equipment, and he trained employees in the use of computers. He even began to offer banking services, taking advantage of customers who were unhappy with traditional Italian banks. The postal service began offering savings accounts, debit cards, and credit cards.
Perhaps the most difficult part of Passera's tenure at Poste was cutting jobs. The postal system was once known for its cronyism, a system in which jobs were exchanged for votes. Despite cutting large numbers of jobs, Passera was able to gain the support of union leaders. As Ciro Amiore, a union leader, told the Financial Times : "You sense that postal workers have regained a certain amount of pride. A few years ago they were considered to be do-nothings and there wasn't much to defend them against that charge" (March 1, 2002). Postal workers came to realize that an efficient, profitable company could mean jobs for them.
In March 2002 Passera left his job at Poste Italiane to take on the challenge of another company experiencing difficulties. There was some talk in government circles that Passera should be made head of Eni, the oil-and-gas company. Instead, he was named CEO of Bank Intesa, Italy's largest bank. The bank was going through a process of restructuring. Over the previous five years, Intesa had made many acquisitions, but management had struggled to efficiently incorporate the new additions. Intesa had hoped to create a large bank that would play a role throughout Europe. However, the various parts of the bank failed to unify. Furthermore, Intesa lost money in its Latin American operations and to loans to troubled companies such as Enron.
When Passera took over, Intesa was losing $1 billion annually. It had unusually high operating costs. Powerful unions made it difficult to cut jobs, although most workers were demoralized. Passera was expected to cut costs and improve efficiency as he had done with the postal system. His goal was to make Intesa into Italy's best-performing bank. To do so, he cuts jobs and added new services. By measuring and evaluating employees based on performance, he was able to cut 25,000 jobs. He also added a new financial services unit that contributed 40 percent of revenue. Intesa also began to offer branches in post offices for customer convenience, and the bank became the country's number-three seller of life insurance. Overall, Passera did what he was asked to do: rescue another Italian company on the brink of collapse.
See also entries on Compagnie Industriali Riunite S.p.A., McKinsey & Company, Inc., and Olivetti S.p.A. in International Directory of Company Histories .
Blitz, James, "Italy to Overhaul Postal Service," Financial Times , March 2, 1998.
Echikson, William, "Posts with the Most," BusinessWeek , August 17, 1998, p. 18.
Hill, Andrew, "Olivetti Chief Poised to Leave," Financial Times , June 27, 1996.
Kapner, Fred, "Intesa Starts Revamp with Passera Move," Financial Times , March 28, 2002.
—— "Pushing the Envelope," Financial Times , March 1, 2002.
"Olivetti on the Ropes," Economist , May 20, 1995, p. 60.