There was a time when investment options for Italian savers were limited. One was to take funds offshore, with the most popular being a quick hop across the border to Switzerland to make a deposit. At home, treasury bonds known as buoni del tesoro (BOT) were the staple diet of many savers, with interest rates sometimes rising above 20 per cent.
This started changing in the 1980s with the expansion of financial adviser networks and growing demand for more sophisticated services and products. The oldest of the networks is Fideuram, a company founded 50 years ago. It was one of the first to launch mutual funds in Italy and to introduce personal financial planning for clients.
Fideuram has since taken its place at the heart of Intesa Sanpaolo’s wealth management operation. In 2015, it became Fideuram Intesa Sanpaolo Private Banking – the largest private banking network in Italy, with almost 6,000 financial advisers which ended first trimester of 2019 as the market leader, with €223,7 billion of assets under management.
Expanding private banking is a target of the Group’s 2018-21 business plan, something it was decided could be best achieved by creating a hub in Switzerland. Intesa Sanpaolo had acquired Swiss banking group Morval Vonwiller, which included Banque Morval, in 2017.
The merger was completed in February this year with the inauguration of Intesa Sanpaolo Private Bank (Suisse) Morval SA. Christian Merle has become chairman of the board of directors and Marco Longo the chairman of the executive committee.
“The aim of our Group’s CEO is to become one of the top five private banks in Europe and the second in the eurozone for assets under management”
Intesa Sanpaolo’s private banking division is becoming a global operation with specific areas, especially Latin America and the Middle East, to be targeted for expansion. “The aim of our Group’s CEO is to become one of the top five private banks in Europe, the second in the eurozone for assets under management and to grow the managed net inflow to around €55 billion by 2021,” says Longo.
In some ways, Switzerland was a natural choice. It is a gateway to the wider world, but also strategically important in the home market. A lot of savings remained in Switzerland and Italian wealth held there is estimated to be around €100 billion.
But there were other, more important reasons. “We were looking for somewhere which represents banking excellence, is in a politically stable environment and for which there is no country risk. No other countries could offer this to the same extent as Switzerland just now,” Longo explains.
One aspect of that stability is immunity from the effects of Brexit. Great Britain and Switzerland have longstanding bilateral agreements which will ensure that, whatever the final Brexit decision, business can continue, Longo points out.
The Group plans to enlarge its private banking staff outside Italy from about 200 now to 300. It has also set about expanding the capacity of the bank, recruiting a team of professionals who can provide services in the modern market.
Latin America has been targeted for expansion. Intesa Sanpaolo has historic roots in the area, with several of the banks that now form the Group having had foreign operations there. However, there are other reasons. “The potential for growth in private banking in Latin America is very attractive. But there are also cultural similarities with Italy and, in some countries such as Argentina, a lot of people of Italian descent,” Longo points out.
The Middle East, too, is an area where Intesa Sanpaolo believes it can expand significantly because of the increases in wealth accumulation and demand for management services.
Deloitte forecast last year that global private wealth will increase by 4 per cent by the end of 2021. It is expected to increase by 7 per cent in the Middle East and 5 per cent in Latin America and Europe. Switzerland was identified as one of the leading centres for competitiveness, size and performance.
Longo stresses the importance of Fideuram’s business model, but acknowledges that something more is required for the international arena. There are differences in approach. For example, leveraging assets to be able to increase investments is more common outside Italy than inside.
“The qualities of Fideuram are obviously very important, but we need to integrate a cultural approach suited to the demands of international clients. It is based on relationship banking that can respond to diversity,” he says.
Before the move to Switzerland, Longo was head of Intesa Sanpaolo’s London hub, one of four international corporate hubs, next to New York, Dubai and Hong Kong. He expects the experience to serve him well in his new role. “London is the most important financial centre in Europe and one of the most vibrant in the world. This will be useful in many aspects of the job and decisions about strategy,” he says.
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