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Intesa SanPaolo bank posts big loss, sells assets

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COLLEEN BARRY | March 28, 2014 05:32 AM EST | AP

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MILAN (AP) — Italian bank Intesa SanPaolo said Friday it will sell its entire portfolio of non-core businesses, including shares in strategic Italian companies Alitalia and Telecom Italia, under a plan to increase earnings.

The move comes as Italy's second-largest bank by assets took a huge write-down to clean up its books for a rigorous stress test, posting a 5.2 billion-euro ($7 billion) fourth-quarter loss.

The bank took a write-down of 5.2 billion euros in the quarter, which widened the quarterly loss from 83 million euros last year. For the year, the bank said Friday its losses were 4.55 billion euros, compared with earnings of 1.6 billion euros last year.

The balance sheet cleanup, which included increasing its provisioning for bad loans by half to 7.1 billion euros, comes as the European Central Bank starts a review of the region's banks to identify weak spots in their finances and, if needed, request fixes.

Intesa SanPaolo previously took a write-down of 10 billion euros in 2011.

The bank said it plans to sell non-core shares with a 2013 book value of 1.9 billion euros as part of a new plan aimed at increasing earnings to 4.5 billion euros by 2017. Intesa this year sold off its shares in Generali insurance, Pirelli and others for a capital gain of 320 million euros.

Intesa said it will focus on fee-intensive businesses in light of low interest rates, and will pay out a total of 10 billion euros in dividends over the next four years. For 2013, the bank said it will pay out 822 million euros in dividends, or .05 euros a share. That will rise to 1 billion euros for 2014 and to 4 billion euros by 2017.