Economy

ECB will boost its QE program: Intesa Sanpaolo CEO

ECB to increase QE: Intesa Sanpaolo CEO
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While speculation is high as to what measure European Central Bank President Mario Draghi will unveil Thursday to boost the euro zone economy, one chief executive is certain it will involve ramping up the bank's massive bond-buying program.

"I think Mario Draghi will increase quantitative easing (QE) because the target is to continue to devalue the euro compared to the U.S. dollar," Carlo Messina, Intesa Sanpaolo's CEO told CNBC.

The European Central Bank is set to meet this Thursday, where it is widely expected that the central bank will announce further stimulus to revive inflation and boost growth in the euro zone.

While credit has flowed more effortlessly since QE, Messina said the euro zone still needed further stimulus, especially as the region's inflation, unemployment and growth is still falling below expectations.

"We need—at least in 2016—to work in order to be sure that the engine can provide results."


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In Italy, the situation is improving with a "recovery in demand for credit", as the country is giving credit to families and increasing the amount of loans, Messina added.

"In my view there is a good result from quantitative easing, but probably we need to have another complete year to have the final success of this very important move from Mario Draghi."

However, there are still some debate over what form the ECB stimulus could take — if at all.

"I think (Draghi's) concerned about what's happening across the Atlantic, what's happening in other parts of the world is leading the exchange rate to be a bit too strong and he wants to prevent that at this stage," Lorenzo Bini Smaghi, ex-member of ECB's executive board, told CNBC on October 22, when Draghi hinted at further stimulus.

"He's just saying 'things can happen' but I think (Draghi) is not committed. He just wants to see the reaction from the markets."

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When discussing the outlook for Intesa Sanpaolo, Messina told CNBC he expected 2016 to deliver another "very good year" for the Italian banking group.

"I think for 2016, we will have zero interest rates, so there will be some (stress) on areas related with financial conditions in our balance sheet, but we will be more than compensated from the increase in commissions that can derive from the wealth management activity. 2016 will be another very good year for Intesa Sanpaolo," Messina added.

By CNBC's Alexandra Gibbs, follow on Twitter @AlexGibbsy and @CNBCi