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124-413: As of today, Mediobanca Group is a diversified banking group consisting of four business divisions: Wealth Management, Corporate & Investment Banking, Consumer Finance and Insurance. The Wealth Management area, whose launch in 2016 reshaped the group's strategy, recorded the highest growth rates in the second half of 2023 and is expected to become by 2026 the first business in terms of fee income and

248-635: A centre-left coalition majority instituted a commission to investigate the Mitrokhin Commission for allegations that it was manipulated for political purposes. In a December 2006 interview given to the television program La storia siamo noi , colonel ex-KGB agent Oleg Gordievsky, whom Scaramella claimed as his source, confirmed the accusations made against Scaramella regarding the production of false material relating to Prodi and other Italian politicians, and underlined their lack of reliability. Despite this, those claims were further repeated by

372-412: A hairdresser ; some polling stations were also provided outside the country for Italians abroad. Most of the party leaders claimed a result of 1 million voters would be a good success for the election, but over four million people for the occasion went to cast a vote in the primary election. After having won the centre-left primary election, Prodi led The Union coalition in the 2006 election . The Union

496-479: A stock market listing. In addition to granting consolidated loans against certificates of deposit and savings books, Mediobanca developed its activity of placement of bonds and shares issued by Italian companies. The professionalism developed by the bank under the, some would say brilliant, guidance of Enrico Cuccia enabled it to quickly acquire a position of leadership in the field of investment banking in Italy. In

620-468: A symbolic candidate , to avoid a one-candidate election. After some time, more candidates were presented, like Union of Democrats for Europe leader Clemente Mastella , Italy of Values leader and former magistrate Antonio Di Pietro , Federation of the Greens leader Alfonso Pecoraro Scanio and others few minor candidates. The primary election may have been foreseen an easy win for Romano Prodi, with

744-479: A century. Prodi's economic programme consisted in continuing the past governments' work of restoration of the country's economic health, in order to pursue the then seemingly unreachable goal of leading the country within the strict European Monetary System parameters in order to allow the country to join the Euro currency. He succeeded in this in little more than six months. During his first premiership, Prodi faced

868-551: A democratic move to bring the public and its opinion closer to the Italian politics. When the primary elections were first proposed, they were mostly meant as a plebiscite for Romano Prodi, since there were no other candidates for the leadership of the coalition. The secretary of the Communist Refoundation Party, Fausto Bertinotti , then announced he would run for the leadership, even if only to act as

992-446: A direct relationship between the banking sector and the investment needs of the reorganization of industry after the devastation caused by World War II . The Banking Act of 1936 established a clear separation between short term and medium-to-long term financing and the major banks had opted for specializing in short-term loans and there was the institution that would deal with financing for the flotation of companies that wished to obtain

1116-411: A diversified portfolio will have less variance than the weighted average variance of its constituent assets, and often less volatility than the least volatile of its constituents. Diversification is one of two general techniques for reducing investment risk. The other is hedging . The simplest example of diversification is provided by the proverb " Don't put all your eggs in one basket ". Dropping

1240-440: A diversified portfolio can never exceed that of the top-performing investment, and indeed will always be lower than the highest return (unless all returns are identical). Conversely, the diversified portfolio's return will always be higher than that of the worst-performing investment. So by diversifying, one loses the chance of having invested solely in the single asset that comes out best, but one also avoids having invested solely in

1364-413: A function of n {\displaystyle n} , the number of assets. For example, if all assets' returns are mutually uncorrelated and have identical variances σ x 2 {\displaystyle \sigma _{x}^{2}} , portfolio variance is minimized by holding all assets in the equal proportions 1 / n {\displaystyle 1/n} . Then

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1488-627: A letter to Siemens from the Frankfurt office of Goldman Sachs regarding the Italdel deal, which revealed that Prodi was made the Senior Advisor of Goldman Sachs International in Italy in March 1990. In November 1996, after Prodi had been elected prime minister, Rome prosecutor Guiseppa Geremia concluded that there was enough evidence to press charges against Prodi for conflict of interest in

1612-545: A new government was formed. Prodi was the first left-leaning candidate to finish first in an Italian general election since 1921 . On 14 October 2007, Prodi became the founding president of the Democratic Party upon foundation of the party. On 12 September 2008, United Nations Secretary-General Ban Ki-moon selected Prodi as president of the African Union –United Nations peacekeeping panel. Since 2021, he

1736-526: A portfolio of 20 stocks to go down that much, especially if they are selected at random. If the stocks are selected from a variety of industries, company sizes and asset types it is even less likely to experience a 50% drop since it will mitigate any trends in that industry, company class, or asset type. Since the mid-1970s, it has also been argued that geographic diversification would generate superior risk-adjusted returns for large institutional investors by reducing overall portfolio risk while capturing some of

1860-575: A portfolio's return below what it would be if the entire portfolio were invested in the asset with the lowest variance of return, even if the assets' returns are uncorrelated. For example, let asset X have stochastic return x {\displaystyle x} and asset Y have stochastic return y {\displaystyle y} , with respective return variances σ x 2 {\displaystyle \sigma _{x}^{2}} and σ y 2 {\displaystyle \sigma _{y}^{2}} . If

1984-539: A proposal from the Italian People's Party (PPI) to run for the 1994 European election . On 13 February 1995 Prodi, along with his close friend Arturo Parisi , founded his political alliance The Olive Tree . Prodi's aim was to build a centre-left coalition composed by centrist and leftist parties, opposed to the centre-right alliance led by Silvio Berlusconi, who resigned from the office of prime minister few weeks before, when Lega Nord withdrew his support to

2108-479: A small number of assets compared to later investment theories, he nonetheless is recognized as a pioneer of financial diversification. Keynes came to recognize the importance, "if possible", he wrote, of holding assets with "opposed risks [...] since they are likely to move in opposite directions when there are general fluctuations" Keynes was a pioneer of "international diversification" due to substantial holdings in non-U.K. stocks, up to 75%, and avoiding home bias at

2232-575: A stop-gap operation to manage this and buy time, laying the foundations for a planned reconstruction, which after six weeks of debate fell to the Western European Union , creating the Multinational Albanian Police Element around a command structure of Italian Carabinieri , which actually undertook the work of Judicial and Police reconstruction, extending into the elimination of the economic causes of

2356-562: A strong supporter of European Integration , became President of the European Commission , thanks to the support of both the conservative European People's Party , the social-democratic Party of European Socialists and the centrist Alliance of Liberals and Democrats for Europe Party in the European Parliament. His commission took office on 13 September 1999 following the scandal and subsequent resignation of

2480-554: A team of 40 professionals. In the Wealth Management area, Mediobanca's international presence consists of the asset management firms Polus Capital Management (specialising in alternative credit strategies launched in 2022 following the strategic combination of two leading European credit managers, Cairn Capital – acquired in 2015 -  and Bybrook Capital - acquired in 2021) and RAM Active Investments (systematic equity operator acquired in 2017) and of CMB Monaco , leader in

2604-424: A time when university endowments in the U.S. and U.K. were invested almost entirely in domestic assets. Romano Prodi Romano Prodi OMRI ( Italian: [roˈmaːno ˈprɔːdi] ; born 9 August 1939) is an Italian politician who served as President of the European Commission from 1999 to 2004 and twice as Prime Minister of Italy , from 1996 to 1998, and again from 2006 to 2008. Prodi

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2728-465: A trial about Moro's murder. Moro's widow later declared that she had repeatedly informed the police that a Via Gradoli existed in Rome, but the investigators did not consider it; some replied to her that the street did not appear in Rome's maps. This is confirmed by other Moro relatives but strongly denied by Cossiga, who served as Interior Minister during Moro's kidnapping. In the 1990s, the séance matter

2852-668: A vote of confidence 1998. He was subsequently appointed President of the European Commission in 1999, serving until 2004. Following the victory of his new coalition, The Union , over the House of Freedoms led by Silvio Berlusconi , at the 2006 election , Prodi became prime minister a second time. On 24 January 2008, he lost a vote of confidence in the Senate and consequently tendered his resignation as prime minister to President Giorgio Napolitano ; he continued in office for almost four months for routine business until early elections were held and

2976-477: A weighting approach that puts assets in proportion to their relative correlation can maximize the available diversification. "Risk parity" is an alternative idea. This weights assets in inverse proportion to risk, so the portfolio has equal risk in all asset classes. This is justified both on theoretical grounds, and with the pragmatic argument that future risk is much easier to forecast than either future market price or future economic footprint. "Correlation parity"

3100-426: Is q = σ y 2 / [ σ x 2 + σ y 2 ] {\displaystyle q=\sigma _{y}^{2}/[\sigma _{x}^{2}+\sigma _{y}^{2}]} , which is strictly between 0 {\displaystyle 0} and 1 {\displaystyle 1} . Using this value of q {\displaystyle q} in

3224-404: Is increasing in n rather than decreasing. Thus, for example, when an insurance company adds more and more uncorrelated policies to its portfolio, this expansion does not itself represent diversification—the diversification occurs in the spreading of the insurance company's risks over a large number of part-owners of the company. The expected return on a portfolio is a weighted average of

3348-410: Is an extension of risk parity, and is the solution whereby each asset in a portfolio has an equal correlation with the portfolio, and is therefore the "most diversified portfolio". Risk parity is the special case of correlation parity when all pair-wise correlations are equal. One simple measure of financial risk is variance of the return on the portfolio. Diversification can lower the variance of

3472-457: Is based on a result from John Evans and Stephen Archer. Similarly, a 1985 book reported that most value from diversification comes from the first 15 or 20 different stocks in a portfolio. More stocks give lower price volatility. Given the advantages of diversification, many experts recommend maximum diversification, also known as "buying the market portfolio ". Identifying that portfolio is not straightforward. The earliest definition comes from

3596-531: Is considered the founder of the Italian centre-left and one of the most prominent figures of the Second Republic . He is often nicknamed Il Professore ("The Professor") due to his academic career. A former professor of economics and international advisor to Goldman Sachs , Prodi ran as lead candidate of The Olive Tree coalition, winning the 1996 election and serving as prime minister until losing

3720-795: Is monotonically decreasing in n {\displaystyle n} . The latter analysis can be adapted to show why adding uncorrelated volatile assets to a portfolio, thereby increasing the portfolio's size, is not diversification, which involves subdividing the portfolio among many smaller investments. In the case of adding investments, the portfolio's return is x 1 + x 2 + ⋯ + x n {\displaystyle x_{1}+x_{2}+\dots +x_{n}} instead of ( 1 / n ) x 1 + ( 1 / n ) x 2 + . . . + ( 1 / n ) x n , {\displaystyle (1/n)x_{1}+(1/n)x_{2}+...+(1/n)x_{n},} and

3844-482: Is now known as "naive diversification", "Talmudic diversification" or "1/n diversification", a concept which has earned renewed attention since the year 2000 due to research showing it may offer advantages in some scenarios. Diversification is mentioned in Shakespeare's Merchant of Venice (ca. 1599): Modern understanding of diversification dates back to the influential work of economist Harry Markowitz in

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3968-668: Is serving as the United Nations Special Envoy for the Sahel . Prodi was born in Scandiano , near Reggio Emilia , in 1939; he is the eighth of nine children. His father, Mario Prodi, was an engineer grown up in a peasant family, and his mother, Enrichetta, was an elementary school teacher. Most of the brothers are, or have been, university professors, among them Giovanni Prodi (professor of mathematical analysis), Vittorio Prodi (professor of physics and member of

4092-459: Is the average of the covariances σ i j {\displaystyle \sigma _{ij}} for i ≠ j {\displaystyle i\neq j} and σ ¯ i 2 {\displaystyle {\bar {\sigma }}_{i}^{2}} is the average of the variances. Simplifying, we obtain As the number of assets grows we get

4216-653: Is the variance on asset i {\displaystyle i} and σ i j {\displaystyle \sigma _{ij}} is the covariance between assets i {\displaystyle i} and j {\displaystyle j} . In an equally weighted portfolio, x i = x j = 1 n , ∀ i , j {\displaystyle x_{i}=x_{j}={\frac {1}{n}},\forall i,j} . The portfolio variance then becomes: where σ ¯ i j {\displaystyle {\bar {\sigma }}_{ij}}

4340-569: The 1997 Albanian civil unrest ; his government proposed the so-called Operation Alba ("Sunrise"), a multinational peacekeeping force sent to Albania in 1997 and led by Italy . It was intended to help the Albanian government restore law and order in their troubled country after the 1997 rebellion in Albania . Following the degenerating loss of administrative control by the Government in

4464-618: The Amsterdam Treaty , but failed to be addressed at the time. The entry into force of the treaty was in doubt for a time, after its initial rejection by Irish voters in a referendum in June 2001. This referendum result was reversed in a subsequent referendum held a little over a year later. In 2004, his last year as Commission President, the European Union was enlarged to admit several more member nations, most formerly part of

4588-791: The Maastricht Treaty (or the Treaty on European Union) and the Treaty of Rome (or the Treaty establishing the European Community which, before the Maastricht Treaty, was the Treaty establishing the European Economic Community). The Treaty of Nice reformed the institutional structure of the European Union to withstand eastward expansion, a task which was originally intended to have been done by

4712-561: The Santer Commission which had damaged the reputation of the institution. It took over from the interim Marín Commission. The College consisted of 20 Commissioners which grew to 30 following the Enlargement of the European Union in 2004. It was the last commission to see two members allocated to the larger member states . This commission (the 10th) saw in increase in power and influence following Amsterdam Treaty . Some in

4836-688: The Soviet bloc . It was the largest single expansion of the European Union (EU), in terms of territory, number of states, and population to date; however, it was not the largest in terms of gross domestic product. It occurred on 1 May 2004. The simultaneous accessions concerned the following countries (sometimes referred to as the "A10" countries ): Cyprus , the Czech Republic , Estonia , Hungary , Latvia , Lithuania , Malta , Poland , Slovakia , and Slovenia . Seven of these were part of

4960-605: The UK Independence Party 's Gerard Batten , the member of the European Parliament for London who stated that he was informed of this by Litvinenko, who was his constituent and former FSB operative. The 16 February 2018 indictment of Paul Manafort unsealed on 23 February, as part of the Mueller special counsel investigation , alleges that foreign politicians hypothesized to be Prodi and Alfred Gusenbauer took payments exceeding $ 2 million from Manafort to promote

5084-416: The capital asset pricing model which argues the maximum diversification comes from buying a pro rata share of all available assets . This is the idea underlying index funds . Diversification has no maximum so long as more assets are available. Every equally weighted, uncorrelated asset added to a portfolio can add to that portfolio's measured diversification. When assets are not uniformly uncorrelated,

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5208-411: The media were not granted. Mediobanca's business structure today consists of four specialized areas: Wealth Management, Corporate & Investment Banking, Consumer Finance and Insurance. Starting from 2003, Mediobanca simplified the structure of the group by exiting the non-strategic equity investments inherited from the historical management; in 2019, revenues from equity investments refer mainly to

5332-503: The 1950s, whose work pioneered modern portfolio theory (see Markowitz model ). An earlier precedent for diversification was economist John Maynard Keynes , who managed the endowment of King's College, Cambridge from the 1920s to his 1946 death with a stock-selection strategy similar to what was later called value investing . While diversification in the modern sense was "not easily available in Keynes's day" and Keynes typically held

5456-730: The Bank's strategy is to provide corporate finance activities through a wide range of corporate and leveraged finance, corporate lending, debt capital market and equity capital market services. The New York office performs brokerage and representative activities. Since summer 2013 Mediobanca has had a footprint in Turkey through subsidiary Mediobanca Advisory. The London branch office, set up in 2008, consists of specialist teams: Credit, Rates, FX, Alternatives and Equity Derivatives , Corporate Lending and Leveraged Finance , Equity research and Advisory . As well as its role as equity and derivatives platform,

5580-536: The Commission, constitute part of the fifth enlargement. The commission was due to leave office on 31 October 2004, but due to opposition from the European Parliament to the proposed Barroso Commission which would succeed it, it was extended and finally left office on 21 November 2004. When his mandate expired, Prodi returned to domestic politics. Shortly before the end of his term as President of

5704-452: The European Commission, Prodi returned to national Italian politics at the helm of the enlarged centre-left coalition, The Union . Having no party of his own, in order to officially state his candidacy for the 2006 general election , Prodi came up with the idea of an apposite primary election , the first of such kind to be ever introduced in Europe and seen by its creator (Prodi himself) as

5828-477: The European Parliament ), Paolo Prodi (professor of modern history), Franco Prodi  [ it ] (professor of atmospheric physics), and Giorgio Prodi (professor of general pathology). In 1969, Prodi married Flavia Franzoni, at that time a student, who later became an economist and university professor. The couple was married by Camillo Ruini , now a well-known cardinal . They have two sons, Giorgio and Antonio. His wife Flavia died on 13 June 2023, at

5952-503: The Group participates. In July 2023, Mediobanca created a joint venture with Founders Factory, a London-based venture studio and startup accelerator and leader in the fintech sector, with the aim of investing in the development of 35 innovative companies in the financial services sector. The death of Enrico Cuccia in June 2000 exacerbated tensions with the banking shareholders. In April 2003, Vincenzo Maranghi agreed to resign as long as

6076-638: The Group's fundamental assets: on the one hand the expertise gained by Mediobanca in over 70 years of activity on the markets alongside businesses, and on the other the heritage from CheBanca!. Since 2006 Mediobanca has embarked on an internationalization process with the aim of expanding its market base, diversifying counterparty risk and assisting its clients in their cross-border transactions. In Corporate and Investment Banking, Mediobanca has operations throughout continental Europe through branch offices opened in London, Luxembourg, Paris and Madrid. In these countries

6200-505: The Group's operations in the BNPL sector as well as the 2022 acquisition of Italian fintech company Soisy. Diversification (finance) In finance , diversification is the process of allocating capital in a way that reduces the exposure to any one particular asset or risk. A common path towards diversification is to reduce risk or volatility by investing in a variety of assets . If asset prices do not change in perfect synchrony,

6324-643: The Italdel- Siemens merger, and secondly concerning the sale of the loss-making state-owned food conglomerate SME to the multinational Unilever , for which he had previously been a paid consultant. Prodi's former employer Goldman Sachs was involved in both of the deals. In February 2007 the Italian Treasury Police raided the Milan office of Goldman Sachs, where they removed a file called " MTononi /memo-Prodi02.doc". They also obtained

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6448-530: The KGB. According to the opposition, which submitted its own minority report, this hypothesis was false, and the purpose of the commission was therefore to discredit him. In the wiretaps, Scaramella had the task of collecting testimonies from some ex-agents of the Soviet secret service refugees in Europe to support these accusations; he was later charged for calumny . In November 2006, the new Italian Parliament with

6572-650: The London office is strategic in strengthening relations with hedge funds and private equity funds. Since 2014 the London office has also been home to the FIG EMEA team. Mediobanca's international activities are characterized by the cross-market presence in the European market of the Corporate & Investment Banking division, which has also been consolidated through several acquisitions abroad. The most recent, in May 2023,

6696-480: The Senate to 156 for Berlusconi's coalition. Even so, Berlusconi refused to concede defeat, claiming unproven fraud. Prodi's appointment was somewhat delayed, as the outgoing president of the Republic, Carlo Azeglio Ciampi , ended his mandate in May, not having enough time for the usual procedure (consultations made by the president, appointment of a prime minister, the motion of confidence and oath of office). After

6820-585: The Unilever deal. The case was however shut down within weeks by superiors, while Geremia was "exiled to Sardinia ". On 25 May 1994, Prodi went to Palazzo Chigi to announce his resignation as IRI President to the new Prime Minister Silvio Berlusconi ; the resignation had been formalised on 31 May and became effective on 22 July. On 11 August, Prodi announced to the Gazzetta di Reggio of his intent to enter politics. A few months earlier, Prodi had rejected

6944-521: The United Kingdom, France, Germany and Spain. Its final and perhaps greatest coup was its decisive role in the 1999 takeover of Telecom Italia by Olivetti . The deal was decided by the narrowest of margins with 51% of shareholders voting in favour of the deal. Under Cuccia's leadership, which lasted until his death in 2000, the bank was widely described as " secretive " despite being publicly traded : meetings with analysts or interviews with

7068-623: The age of 76. After completing his secondary education at the Liceo Ludovico Ariosto in Reggio Emilia, Prodi graduated in law at Milan 's Università Cattolica in 1961 with a thesis on the role of protectionism in the development of Italian industry. He then carried out postgraduate studies at the London School of Economics . Prodi has received almost 20 honorary degrees from institutions in Italy, and from

7192-423: The asset that comes out worst. That is the role of diversification: it narrows the range of possible outcomes. Diversification need not either help or hurt expected returns, unless the alternative non-diversified portfolio has a higher expected return. There is no magic number of stocks that is diversified versus not. Sometimes quoted is 30, although it can be as low as 10, provided they are carefully chosen. This

7316-514: The asymptotic formula: Thus, in an equally weighted portfolio, the portfolio variance tends to the average of covariances between securities as the number of securities becomes arbitrarily large. The capital asset pricing model introduced the concepts of diversifiable and non-diversifiable risk. Synonyms for diversifiable risk are idiosyncratic risk, unsystematic risk, and security-specific risk. Synonyms for non-diversifiable risk are systematic risk , beta risk and market risk . If one buys all

7440-406: The bank's independence was preserved. This was achieved by promoting two of his aides to top management positions, Alberto Nagel and Renato Pagliaro. They developed market operations more intensely ( IPOs , M&A, trading of financial instruments), reducing the weight of historical shareholdings (some of which, like Fiat, were sold). They also achieved penetration of the main foreign markets, where

7564-486: The bank's presence was established through local professional teams. With the launch of Che Banca! in 2008, operations in the retail banking segment expanded creating a model of multi-channel distribution (Internet, call centers, branches) capable of providing substantial deposit flows. While the years immediately following the resignation of Maranghi entailed the appointment of an external Presidency ( Gabriele Galateri and Cesare Geronzi), subsequent events reestablished all

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7688-417: The basket will break all the eggs. Placing each egg in a different basket is more diversified. There is more risk of losing one egg, but less risk of losing all of them. On the other hand, having a lot of baskets may increase costs. In finance, an example of an undiversified portfolio is to hold only one stock. This is risky; it is not unusual for a single stock to go down 50% in one year. It is less common for

7812-425: The belief investors will have time to recover from any downturns. Yet this belief has flaws, as John Norstad explains: This kind of statement makes the implicit assumption that given enough time good returns will cancel out any possible bad returns. While the basic argument that the standard deviations of the annualized returns decrease as the time horizon increases is true, it is also misleading, and it fatally misses

7936-498: The case of his client, Viktor Yanukovich ; both denied this and said their work was focused to get closer European Union–Ukraine relations . After leaving his position in 1989, Prodi ran the Bologna based consulting company Analisi e Studi Economici , which he jointly owned along with his wife. Between 1990 and 1993 the company earned £ 1.4 million, most of which was paid by the investment bank Goldman Sachs . In 1993, Prodi

8060-566: The changing context of the financial markets of the early 1990s, Mediobanca evolved by engaging more decisively in investment banking operations, creating a major diversification in the private banking business and expanding its consumer credit area, finally developing an international presence. In the 1990s, it was among the main players in the Italian program of privatization of large state-owned enterprises (the largest operations concerned Telecom Italia , Enel , Banca di Roma and Banca Nazionale del Lavoro ), also contributing to foreign programs in

8184-471: The conditions guaranteeing the independence of the institution whose leadership today has Alberto Nagel as CEO and Renato Pagliaro as president. In 2001, the partnership between Mediobanca and Banca Mediolanum gave life to Banca Esperia, a project launched within Mediobanca and designed starting from an intuition of Alberto Nagel with the aim of offering the institution's entrepreneurial clients support in

8308-458: The conflict was settled and the bank was privatized by the setting up of a shareholders’ syndicate with equal representation of banking groups (initially the three founding banks) and private groups. On that occasion the position of CEO went to Vincenzo Maranghi and Cuccia accepted his appointment as Honorary President maintaining a symbolic presence in the bank and performing strategic consultancy. After Antonio Maccanico, called to government posts,

8432-549: The count progressed. On 11 April 2006, Prodi declared victory; Berlusconi never conceded defeat explicitly but this is not required by the Italian law . Preliminary results showed The Union leading the House of Freedoms in the Chamber of Deputies , with 340 seats to 277, thanks to obtaining a majority bonus (actual votes were distributed 49.81% to 49.74%). One more seat is allied with The Union ( Aosta Valley ) and 7 more seats in

8556-445: The crisis. The Italian 3rd Army Corps assumed responsibility for the stop-gap mission as Operation Alba, the first multinational Italian-led Mission since World War II. Eleven contributing European Nations brought humanitarian aid to a country that was in a dramatic economic and political situation. In 1997, Prodi declared that "the problem of the safety of the country seems to be no longer one of external safety, but an internal one:

8680-453: The domestic market and abroad led to the acquisition of small holdings which have increased over time reinvesting part of the profits. They became the bank's main real investment for the protection of its equity. These packages favored the retention of major customers, the most important being Assicurazioni Generali , Montedison , SNIA Viscosa , Pirelli and Fiat . In 1963, together with other banks and financial institutions, Mediobanca led

8804-519: The expected returns on each individual asset: where x i {\displaystyle x_{i}} is the proportion of the investor's total invested wealth in asset i {\displaystyle i} . The variance of the portfolio return is given by: Inserting in the expression for E [ R P ] {\displaystyle \mathbb {E} [R_{P}]} : Rearranging: where σ i 2 {\displaystyle \sigma _{i}^{2}}

8928-785: The expression for the variance of portfolio return gives the latter as σ x 2 σ y 2 / [ σ x 2 + σ y 2 ] {\displaystyle \sigma _{x}^{2}\sigma _{y}^{2}/[\sigma _{x}^{2}+\sigma _{y}^{2}]} , which is less than what it would be at either of the undiversified values q = 1 {\displaystyle q=1} and q = 0 {\displaystyle q=0} (which respectively give portfolio return variance of σ x 2 {\displaystyle \sigma _{x}^{2}} and σ y 2 {\displaystyle \sigma _{y}^{2}} ). Note that

9052-432: The favorable effect of diversification on portfolio variance would be enhanced if x {\displaystyle x} and y {\displaystyle y} were negatively correlated but diminished (though not eliminated) if they were positively correlated. In general, the presence of more assets in a portfolio leads to greater diversification benefits, as can be seen by considering portfolio variance as

9176-571: The first "Prime Minister of the European Union". As well as the enlargement and Amsterdam Treaty, the Prodi Commission also saw the signing and enforcement of the Treaty of Nice as well as the conclusion and signing of the European Constitution : in which he introduced the "Convention method" of negotiation. The treaty was signed by European leaders on 26 February 2001 and came into force on 1 February 2003. It amended

9300-695: The first coalition composed of a post-communist party to win a general election since the Second World War . In the Senate, The Olive Tree obtained the majority; in the Chamber, it required the external support of Communist Refoundation Party . On 17 May 1996, Prodi received from President Oscar Luigi Scalfaro the task of forming a new government. He ultimately formed a 23-member cabinet that included 16 PDS ministers (including Deputy Prime Minister Walter Veltroni ) and 10 PDS junior ministers–the first (former) Communists to take part in government in half

9424-578: The first days of March 1997, culminating in the desertion of most Police and many Republican Guard and Army units, leaving their armouries open to the inevitable looting which soon followed, several Nations autonomously helped evacuate their Nationals in Operation Silver Wake and Operation Libelle . The UN Security Council therefore agreed the United Nations Security Council Resolution 1101 as

9548-422: The following 15 years CheBanca! created and leveraged on a model of multi-channel distribution (Internet, call centers, branches) for providing Wealth Management services to Italian households. Starting with the 2016-19 strategic plan, Mediobanca outlined a new growth path for CheBanca!, with an increasing focus on managing Italian’s savings and investments. Such a positioning played a more and more relevant role in

9672-477: The foreign constituency. The House of Freedoms had secured a slight majority of Senate seats elected within Italy (155 seats to 154), but The Union won 4 of the 6 seats allocated to voters outside Italy , giving them control of both chambers. On 19 April 2006, Italy's Supreme Court of Cassation ruled that Prodi had indeed won the election, winning control of the Chamber of Deputies by only 24,755 votes out of more than 38 million votes cast, and winning 158 seats in

9796-446: The formation of the first shareholder syndicate to intervene in the capital of a company, Olivetti , with the objective of redefining its strategic purchases on several occasions of Generali shares led to the bank being its largest shareholder (currently 13%). There were numerous, equally important, operations with Montedison , Fiat , SNIA Viscosa and Italcementi . These and other firms operated with Mediobanca were commonly called

9920-571: The former Eastern Bloc (of which three were from the former Soviet Union and four were and still are members of the Central European alliance Visegrád Group ), one of the former Yugoslavia (together sometimes referred to as the "A8" countries ), and the remaining two were Mediterranean islands and former British colonies . Part of the same wave was the 2007 enlargement of the European Union that saw accession of Bulgaria and Romania, who were unable to join in 2004, but, according to

10044-485: The fraction q {\displaystyle q} of a one-unit (e.g. one-million-dollar) portfolio is placed in asset X and the fraction 1 − q {\displaystyle 1-q} is placed in Y, the stochastic portfolio return is q x + ( 1 − q ) y {\displaystyle qx+(1-q)y} . If x {\displaystyle x} and y {\displaystyle y} are uncorrelated,

10168-444: The gains from diversification. Their approach was to consider a population of 3,290 securities available for possible inclusion in a portfolio, and to consider the average risk over all possible randomly chosen n -asset portfolios with equal amounts held in each included asset, for various values of n . Their results are summarized in the following table. The result for n =30 is close to n =1,000, and even four stocks provide most of

10292-905: The government. The movement was immediately supported by Mariotto Segni , leader of the centrist Segni Pact ; after few weeks the post-communist Democratic Party of the Left of Massimo D'Alema , the PPI and the Federation of the Greens also joined the Olive Tree coalition. On 19 February 1996, the outgoing Prime Minister Lamberto Dini announced that he would run in the election with a new party called Italian Renewal , allied with Prodi's Olive Tree rather than Berlusconi's Pole for Freedoms . Shortly after Berlusconi claimed that Dini "copied his electoral programme". On election day, Prodi's Olive Tree coalition won over Berlusconi's Pole for Freedoms, becoming

10416-469: The grave via a séance and a Ouija board. Whilst during this supposed séance Prodi thought Gradoli referred to a town on the outskirts of Rome, it probably referred to the Roman address of a Red Brigades safe house, located at no. 96, Via Gradoli. The information was trusted and a police group made an armed blitz in the town of Gradoli, 80 km from Rome , on the following day, 6 April, although Moro

10540-511: The higher rates of return offered by the emerging markets of Asia and Latin America. If the prior expectations of the returns on all assets in the portfolio are identical, the expected return on a diversified portfolio will be identical to that on an undiversified portfolio. Some assets will do better than others; but since one does not know in advance which assets will perform better, this fact cannot be exploited in advance. The return on

10664-403: The individual business lines have little to do with one another, yet the company is attaining diversification from exogenous risk factors to stabilize and provide opportunity for active management of diverse resources. The argument is often made that time reduces variance in a portfolio: a "time diversification". A common belief is younger investors should avoid bonds and emphasize stocks, due to

10788-659: The literature on the fallacy of time diversification have been from Paul Samuelson , Zvi Bodie , and Mark Kritzman. Diversification is mentioned in the Bible , in the book of Ecclesiastes which was written in approximately 935 B.C.: Diversification is also mentioned in the Talmud . The formula given there is to split one's assets into thirds: one third in business (buying and selling things), one third kept liquid (e.g. gold coins), and one third in land ( real estate ). This strategy of splitting wealth equally among available options

10912-472: The management of liquidity deriving from extraordinary operations carried out by the institution's Corporate & Investment Banking division. Banca Esperia laid the groundwork for the launch of Mediobanca Private Banking. The division serving large Italian entrepreneurial families of Mediobanca was officially established in December 2017 after the acquisition of 50% stake owned by Banca Mediolanum and with

11036-525: The media described president Prodi as being the first "Prime Minister of the European Union ". It was during Prodi's presidency, in 2002, that 11 EU member states ditched their national currencies and adopted the euro as their common currency. This commission (the 10th) saw an increase in power and influence following the Amsterdam Treaty . The treaty was the result of long negotiations which began in Messina, Sicily , on 2 June 1995, nearly forty years after

11160-570: The member states agreed to devolve certain powers from national governments to the European Parliament across diverse areas, including legislating on immigration, adopting civil and criminal laws, and enacting foreign and security policy (CFSP), as well as implementing institutional changes for expansion as new member nations join the EU. Due to this increased power of the Commission President, some media described President Prodi as being

11284-406: The mid-1950s, Mediobanca entered into agreements with important foreign partners ( Lazard Group , Berliner Handels-Gesellschaft , Lehman Brothers , Sofina ) that enabled the bank to play a role on the international market and obtained a Stock Exchange listing in 1956. Since its origins, Mediobanca has operated in collateral areas to the credit market, such as trust management (1948 with Spafid),

11408-425: The most centrist; other rumours indicated such "fake" left-wing voters would vote for Bertinotti, because his leadership would likely lose any grip on the political centre . The election had been held nationwide on 16 October 2005, from 8 am to 10 pm. Poll stations were mainly managed on a voluntary basis; they were hosted mainly in squares, local party quarters, schools, and even restaurants , bars , campers and

11532-699: The notes of the Italian Parliament commission on terrorism, the séance is described as a fake, used to hide the true source of the information. In 1997, Andreotti declared that the information came from the Bologna section of Autonomia Operaia , a far-left organization with some ties with the Red Brigades, and that Francesco Cossiga also knew the true source. Judge Ferdinando Imposimato considered Andreotti's theory as possible but accused him of having kept information that could have been valuable in

11656-413: The other candidates running mostly to "measure their strengths" in the coalition, and they often talked about reaching a certain percentage rather than winning. However, there were rumours of supporters of the House of Freedoms trying to participate in the elections, and vote in favour of Mastella, reputed to be the least competent of the candidates and the least likely to win against Berlusconi, other than

11780-483: The point, because for an investor concerned with the value of his portfolio at the end of a period of time, it is the total return that matters, not the annualized return. Because of the effects of compounding, the standard deviation of the total return actually increases with time horizon. Thus, if we use the traditional measure of uncertainty as the standard deviation of return over the time period in question, uncertainty increases with time. Three notable contributions to

11904-584: The portfolio return's variance equals var [ ( 1 / n ) x 1 + ( 1 / n ) x 2 + . . . + ( 1 / n ) x n ] {\displaystyle {\text{var}}[(1/n)x_{1}+(1/n)x_{2}+...+(1/n)x_{n}]} = n ( 1 / n 2 ) σ x 2 {\displaystyle n(1/n^{2})\sigma _{x}^{2}} = σ x 2 / n {\displaystyle \sigma _{x}^{2}/n} , which

12028-718: The presence of per-asset investment fees, there is also the possibility of overdiversifying to the point that the portfolio's performance will suffer because the fees outweigh the gains from diversification. The capital asset pricing model argues that investors should only be compensated for non-diversifiable risk. Other financial models allow for multiple sources of non-diversifiable risk, but also insist that diversifiable risk should not carry any extra expected return. Still other models do not accept this contention. In 1977 Edwin Elton and Martin Gruber worked out an empirical example of

12152-454: The presidency of Romano Prodi , when the three banks were instructed to discontinue Mr. Cuccia's mandate. Cuccia resigned as general manager by was elected to the Board by the shareholder Lazard while Mediobanca continued to be managed by two of his trusted aides, Silvio Salteri as CEO and Vincenzo Maranghi , his generally accepted “heir”. In 1988, when Antonio Maccanico took over the presidency,

12276-506: The presidency went to Francesco Cìngano, who was Mattioli's successor in Banca Commerciale Italiana . The new banking law passed in 1993, abolished the specialization requirement allowing ordinary banks to enter the medium/long term credit market and generated a series of problems between Mediobanca and its banking partners, which ceased to be the almost exclusive channel for the placement of term deposits and bonds. In

12400-742: The private banking market in Monaco . Among the acquisitions in Wealth Management it has been relevant the acquisition (carried out by the subsidiary CheBanca!) of some retail business operations of Barclays Italy , transaction announced in 2016 that increased CheBanca!'s positioning in investment management. Mediobanca also started the geographical diversification of the Group's Consumer Finance division in 2023, taking over 100% stake in HeidiPay Switzerland AG, fintech firm specializing in Buy Now Pay Later . The deal strengthened

12524-433: The promotion of international trade (through trading companies mainly operating between Italy and Africa in the mid-1950s), consumer credit (in 1960 through the company Compass which had been set up ten years earlier to develop new initiatives with industrial partners), auditing (1961 with Reconta, which was the first Italian audit firm), leasing operations (1970 with Selma). The placement of securities of Italian companies on

12648-439: The reduction in risk compared with one stock. In corporate portfolio models, diversification is thought of as being vertical or horizontal. Horizontal diversification is thought of as expanding a product line or acquiring related companies. Vertical diversification is synonymous with integrating the supply chain or amalgamating distributions channels. Non-incremental diversification is a strategy followed by conglomerates, where

12772-523: The rescue of large enterprises in crisis. On 2 April 1978, Prodi and other teachers at the University of Bologna passed on a tip-off that revealed the whereabouts of the safe house where the kidnapped Aldo Moro , the former prime minister, was being held captive by the Red Brigades . Prodi stated that he had been given this tip-off by the founders of Christian Democracy, contacted from beyond

12896-499: The rest of Europe, North America, Asia, and Africa. On 25 November 1978, Prodi was appointed Minister of Industry, Commerce, and Crafts in the government of the Christian Democracy leader Giulio Andreotti . Even if he was a party member, Prodi was widely considered a technical minister. As minister, he promoted a law, known as Prodi law, which aimed a regulating of the extraordinary state administration procedure for

13020-536: The result of a vote of no confidence in Prodi's government, D'Alema's nomination was passed by a single vote. This was the first occasion in the history of the Italian Republic on which a vote of no confidence had ever been called; the Republic's many previous governments had been brought down by a majority "no" vote on some crucially important piece of legislation (such as the budget). In September 1999 Prodi,

13144-518: The safety of citizens in their everyday life". Prodi's government fell in 1998 when the Communist Refoundation Party withdrew its external support. This led to the formation of a new government led by Massimo D'Alema as prime minister. There are those who claim that D'Alema, along with People's Party leader Franco Marini , deliberately engineered the collapse of the Prodi government to become prime minister himself. As

13268-746: The second in terms of revenues. The company is listed in the FTSE MIB index of the Borsa Italiana and a member of the Standard Ethics Italian Banks Index. Mediobanca has been designated as a Significant Institution since the entry into force of European Banking Supervision in late 2014, and as a consequence is directly supervised by the European Central Bank . Mediobanca was set up to provide medium-term financing for manufacturers and establish

13392-824: The share in Assicurazioni Generali . The Wealth Management division (25% of Group revenues) is segmented as follows: Mediobanca is active in Corporate & Investment Banking (22% of revenues), directly and through subsidiaries (in particular Messier & Associès, based in Paris and Arma Partners, based in London and offices in the Principality of Monaco), covering the following areas: financial services for companies and in particular in M&;A, Capital Market, Corporate Lending and Trading services. The Consumer Finance division (34% of revenues) consists mainly of

13516-481: The signing of the Treaty of Rome , and reached completion in Amsterdam on 18 June 1997. Following the formal signing of the Treaty on 2 October 1997, the member states engaged in an equally long and complex ratification process. The European Parliament endorsed the treaty on 19 November 1997, and after two referendums and 13 decisions by parliaments, the member states finally concluded the procedure. Under this treaty

13640-552: The stocks in the S&;P 500 one is obviously exposed only to movements in that index . If one buys a single stock in the S&;P 500, one is exposed both to index movements and movements in the stock based on its underlying company. The first risk is called "non-diversifiable", because it exists however many S&P 500 stocks are bought. The second risk is called "diversifiable", because it can be reduced by diversifying among stocks. In

13764-496: The strategic plans that followed, especially in the 2023-26 strategic plan "One Brand One Culture" in which the growth of the Wealth Management division has been defined as a priority objective for the Group. According to the strategic guidelines, in January 2024 Mediobanca launched Mediobanca Premier , a new bank of the Group specializing in wealth management and investments for Italian households, which combines and enhances two of

13888-446: The subsequent merger by incorporation of Banca Esperia within Mediobanca. The ambition of this division was precisely the one imagined by Nagel at the end of the 1990s: to become the first Private & Investment Bank in Italy, a model that is now also highly regarded by the financial community. With the launch of CheBanca! in 2008, a digital native bank, Mediobanca expanded its funding model by accessing substantial deposit flows. In

14012-549: The subsidiary company Compass Banca S.p.A. In line with the Group's sustainability policy, at the end of fiscal year 2022-23 Mediobanca selected 100 percent of new investments in asset management using both ESG and financial criteria and obtained 100 percent of energy procurement from renewable resources. Mediobanca also achieved climate neutrality in 2023, in adherence to the program of the UN-sponsored Net-Zero Banking Alliance , in which

14136-714: The séance, and that Gradoli had appeared in several sessions, even if the participants had changed. Later, other Italian members of the European Commission alleged that Prodi had invented this story to conceal the real source of the tip-off, which they believed to have originated somewhere among the far-left Italian political groups. This issue came back again in 2005, when Prodi was accused of being "a KGB man" by Mario Scaramella . The allegations were rejected by Prodi. Former Federal Security Service (FSB) officer Alexander Litvinenko also said that FSB deputy chief Anatoly Trofimov "did not exactly say that Prodi

14260-435: The variance of portfolio return is var ( q x + ( 1 − q ) y ) = q 2 σ x 2 + ( 1 − q ) 2 σ y 2 {\displaystyle {\text{var}}(qx+(1-q)y)=q^{2}\sigma _{x}^{2}+(1-q)^{2}\sigma _{y}^{2}} . The variance-minimizing value of q {\displaystyle q}

14384-518: The variance of the portfolio return if the assets are uncorrelated is var [ x 1 + x 2 + ⋯ + x n ] = σ x 2 + σ x 2 + ⋯ + σ x 2 = n σ x 2 , {\displaystyle {\text{var}}[x_{1}+x_{2}+\dots +x_{n}]=\sigma _{x}^{2}+\sigma _{x}^{2}+\dots +\sigma _{x}^{2}=n\sigma _{x}^{2},} which

14508-408: The ‘Northern Galaxy’. When Mediobanca was set up, the shareholders authorized Enrico Cuccia to operate using his own judgment and he kept the bank free from the political influences that gradually affected IRI, the public entity that controlled the three Italian banks of national interest that were Mediobanca's majority shareholders. 1982 saw the beginning of a period of intense friction with IRI under

14632-565: Was a KGB agent, because the KGB avoids using that word." The same accusation was raised in 2002 by the Mitrokhin Commission , which was closed in 2006 with a majority and a minority report, without reaching shared conclusions, and without any concrete evidence given to support the original allegations of KGB ties to Italian politicians contained in the Mitrokhin Archive . Led by the centre-right coalition majority, it

14756-469: Was a heterogeneous alliance, which was formed by centrist parties like UDEUR and communists like PRC and Party of Italian Communists . Prodi led his coalition to the electoral campaign preceding the election, eventually on 9 and 10 April won by a very narrow margin of 25,000 votes, and a final majority of two seats in the Senate . Initial exit polls suggested a victory for Prodi, but the results narrowed as

14880-806: Was between the main candidates to become Prime Minister of Italy at the head of a technocratic government ; instead, the Governor of the Bank of Italy , Carlo Azeglio Ciampi , was chosen for this office by President Oscar Luigi Scalfaro . In 1993–1994, Prodi was appointed again President of the IRI, by Ciampi, where he oversaw extensive privatization of public assets. For his activities in this period Prodi would later twice come under investigation – firstly for an alleged conflict of interest in relation to contracts awarded to his own economic research company in relation to

15004-473: Was criticized as politically motivated, as it was focused mainly on allegations against opposition figures. 2006 saw the publication of telephone interceptions between the chairman of the Mitrokhin Commission, Forza Italia senator Paolo Guzzanti , and Scaramella. In the wiretaps, Guzzanti made it clear that the true intent of the Mitrokhin Commission was to support the hypothesis that Prodi would have been an agent financed or in any case manipulated by Moscow and

15128-529: Was not found. The supernatural element was generally not overlooked during the investigations. For example, the Italian government had engaged a diviner , hoping that he would find Moro's location. The police made another fruitless blitz in Viterbo after an abbess declared that, during a vision, she had seen him there. Prodi spoke to the Italian Parliament 's commission about the case in 1981. In

15252-480: Was reopened by the Italian Parliament's commission on terrorism. While Prodi (then Prime Minister) declared that he had no time for an interview, both Mario Baldassarri (senator and vice-minister in two Silvio Berlusconi cabinets) and Alberto Clò (Minister of Industry in Lamberto Dini 's cabinet and owner of the house where the séance was performed) responded to the call; they confirmed the circumstances of

15376-529: Was the acquisition of Arma Partners, a UK-based company that is a leader in the digital economy market for advisory in the contexts of M&A transactions. Mediobanca strengthened its presidium in France and began the development of a pan-European Corporate & Investment Banking platform in 2019 with the acquisition of Messier Maris & Associés, an investment bank based in Paris with offices in New York, with

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