Italy’s strength lies in the talent of your companies – Corriere.it

Bernard Mensah has been Bank of America’s head of international operations since 2020 and is the CEO of its largest overseas subsidiary, Merrill Lynch International. Considered one of the most experienced bankers internationally, Mensah has always had a particular interest in Italy. Perhaps due to Bank of America’s Italian roots. In fact, in 1904 it was Amadeo Pietro Giannini, an Italian emigrant, who founded the bank in San Francisco. In the beginning it was even called «Bank of Italy». And it was only in 1928 that the change of name to “Bank of America” ​​was decided. In a situation so strongly in flux, with countries competing with each other within Europe itself to attract capital, investments from abroad, the point of view of those involved in managing the international activities of a giant like Bank of America is precious. It is a question of trying to understand the attitude of an international credit giant towards Italy and the trend of world economies. We met Mensah at Corriere della Seraon one of his frequent trips to our country. And the next exchange of emails became an interview.

You often come to Milan, what is Bank of America’s perspective on Italy today and on the state of the European economy in general? Are you optimistic about our country?

«After a strong rebound in 2021, the Italian economy grew by 3.7% in 2022 and continued to grow in the first quarter of this year, albeit at a slower pace. However, while it is good that the EU recently raised its forecast for 2023 to +1.2%, our economists remain understandably cautious about Italy’s and the Eurozone’s short-term economic outlook. The current context is very complex and full of pitfalls, such as energy prices and monetary and fiscal policies which, albeit slowly, will soon have to change course. However, there are also positive developments that will benefit the Italian economy.”

Caution that does not mean negativity…

«First of all, the country managed to get through the past winter demonstrating a much higher resilience than many expected. Italy, like the rest of Europe, has been able to adapt quickly to the new shocks. Secondly, the country has been ambitious in its Next Generation EU (“Ngeu”) strategy, having been the first to successfully apply for both grants and loans to support its reforms. I believe that the full implementation of this strategy can significantly advance Italy and help it perform at its best over the long term. Thirdly, the natural export orientation of Italian companies, in particular towards the United States, and the strong momentum of tourism are representing an important support for the country’s economy».

«On a personal level, based on my many interactions with the top management of Italian companies, I have strong optimism towards your companies, which are clearly benefiting from the current changes at an international level, including the re-localization of value chains ( reshoring). I was able to personally appreciate an extremely rare level of talent and resilience».

But there are clear concerns about the arrival of a recession in Europe. What are your main concerns?

“We are still dealing with the effects of two major shocks. Energy prices and availability are weighing heavily on financial results in Europe, leading to very modest growth prospects for the coming quarters. If we add monetary policy and what we expect to see in the coming months, then we are faced with an economy capable of growing at a rate only slightly above zero, even considering the positive impact of the 800 billion euros of the Ngeu. As I mentioned, energy is certainly one of the main concerns. Furthermore, with higher rates, a rapidly shrinking ECB balance sheet and very high capital needs in Europe, there is a risk of financial market stress in the medium term.

Although the worst phase of the energy crisis is behind us, it seems to me that we still need to be cautious…

“I am very confident that European governments have used this period wisely to prepare for the demands of winter, but only time will tell. Italy has managed to go from being heavily dependent on Russia in 2021 to being almost completely independent by the end of 2023. Energy prices have fallen well below their peaks, but still remain elevated compared to pre-crisis levels and, in general, above those observed in many other areas of the world. From an economic point of view, with such a strong European dependence on heavy industry, it is essential to seize the opportunity to move towards less expensive forms of renewable energy, if we are to remain competitive with the United States and Asia.

Cop 28 is around the corner and it will be an opportunity to take stock of these issues: what do you think will be the axes of this year’s debate?

“Many climate pledges were made during Glasgow 2021, while last year’s Egypt edition was described as an ‘Implementation Cop’. Now, looking at the 2021 Glasgow edition, many climate pledges were made, while last year’s Egypt edition was described as an ‘Implementation Cop’. Now, looking to the Dubai Cop, there is an expectation for action. There has been a lot of discussion about fossil fuels and we know how important it is to mitigate their effects, especially for the most vulnerable countries. I expect that maintaining the 1.5 degree limit will be at the heart of the negotiations, especially for states on the front lines of climate change. The UAE has demonstrated leadership and commitment to climate tech and I hope COP28 proves to be a catalyst for further investment. We need all countries, including those with the highest CO2 emissions and the largest producers of fossil fuels, to lead efforts to combat climate change.

Technology will also be key in this field and she personally hosts an annual conference on the most revolutionary ones every July. Which one convinced you, which one are you enthusiastic about?

“We launched the Breakthrough Technology Conference to identify the most important technologies that can transform our future, whether it’s quantum computing, artificial intelligence (AI) or space travel. During the 2022 edition, our conversations revealed that AI was much closer to revolutionizing many industries than we previously thought. It will be fascinating to hear about the progress AI has made since then, from the perspective of the world’s leading experts. Furthermore, this year I am also interested in exploring topics such as nuclear fusion and clean technologies (clean tech), critical areas with the potential to benefit all of us.”

But returning to Europe, do you see a situation of opportunity? Where in the specific case are you investing in the Union?

«The discussion on the new framework of public fiscal rules is crucial: the lack of an agreement could lead Europe to repeat the fiscal policy mistakes made in the early 2010s.As regards the areas in which Bank of America is investing, the answer is: everywhere! We have gained market shares in our Corporate and Investment banking activities and Global markets: successful business in Italy and in Europe, they are fundamental elements of our international strategy”.

What advice would you give to Italian companies looking to expand their business in Italy and around the world?

«Geopolitics has made the world a more complex place for companies to navigate, both in terms of end markets and for planning their supply chain strategy. It is therefore essential for companies to increase their resilience by reflecting on their plan B. To do this successfully, it is important to relate to organizations that are truly global, but at the same time equipped with a deep knowledge of local markets, able to help companies to reposition themselves when necessary. In this context, Bank of America is proud to be the ideal partner given our global capabilities. Finally, I would like to encourage Italian top managers to seize the opportunities that will present themselves when Italy hosts the G7 next year: the event will have the attention of the world’s eyes».

What are the country’s strengths and what should be the priorities of Italian companies when one thinks of the United States and its market?

«Italy is a country with large multinationals, some of which operate in the energy sector, which have supported the country in the difficult moments of the energy crisis. But Italy’s great strength is its entrepreneurs and its industrial system which, over the years, has constantly invested to innovate in many segments. This innovation, together with the flexibility of the companies, is an asset that has allowed many of them to grow in the United States. I think Italian companies should continue to look to the United States as a great market in which to invest and demonstrate their potential. Bank of America is ready to support this growth and to be the point of reference for its Italian customers for any need, wherever they need it”.

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