Banca Esperia rethinks plans in intermediary light

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Italy’s Banca Esperia, Banca Mediolanum and Mediobanca’s private bank, has gone through evolutionary times over the last year, at the end of which the CEO Andrea Cingoli (pictured) came up with a business development plan aimed at getting the bank growing more internationally and reshaping its functions .

Since the beginning of 2014, Banca Esperia has started an intense series of appointments to boost its team of private bankers in line with its business development plan. At the end of June, the private bank had €15.5bn AUM; costs were going down and revenues from commission were going up at a rate of 20%, while the net profit was estimated to be of €7.5m.

Italian private banking state of the union

Cingoli acknowledges that the situation has been tough over the last years for the Italian private banking sector, which suffered significantly after the financial crush of 2008. “After the crisis, Italian private banking has fell into a structural crisis which many thought to be exclusively linked to the year of the crisis. At Banca Esperia, we immediately started to work on revamping the firm in order to meet client needs,” Cingoli explains.

According to Banca Esperia’s CEO there are several reasons behind the private banking’s sector difficulties. Although some returns are starting to be seen after some time, pre-crisis levels are far away and the increase of regulation is tightening its grip making prices no longer convenient, as Cingoli points out.

“Moreover, private banking has lost its appeal, because the traditional business model, based only on asset management services, is no longer satisfying all the clients’ needs of diversification” he adds. While private banking as a way of personalised wealth management has been made less appealing by the crisis, Cingoli says that private clients are becoming more sophisticated and points at a peculiarity of the Italian market.

“In Italy, about 80% of the clients are HNWI entrepreneurs who are mostly following a strict family business model. At the end of the day, Italy is a country based on family-run SMEs that look more to preserve capital than to grow it. Moreover, Italian private clients looked at domestic real estate as a relevant way to invest their money and diversify the business risk, the result is that a high percentage of their portfolio has been invested in this asset class” Cingoli also explains.

As another element of difficulty, Banca Esperia’s CEO points at the relative “youth” of Italy’s wealth. HNWI have not always made themselves familiar enough with wealth governance, as it has instead happened in most northern European countries.

New model

However, Cingoli does not seat and wait to see what is going to happen, but has put forward a business development plan to take his private bank into a new era. To do that, Banca Esperia has significantly opened up its architecture to meet a “Private Investment Banking” business model, advisory based, and has invested in building out a stronger team of private bankers.

“At present, we aim at creating a model which is not merely based on distribution but that provides: asset management services through Italian and Luxembourg-based platforms, working with a open architecture approach; wealth planning advisory solutions; corporate and real estate advisory, ” he explains.

2014 key objectives

Asked what he wants to achieve by the end of this year, Cingoli has no hesitation: “Stable profits; keeping strengthening our team; establishing our brand and the new business model in the entrepreneurial cluster of Italian HNW market,” he says.


In the news

Massimo Doris CEO of the Mediolanum Group, which owns 50% of Banca Esperia, has recently expressed the group’s intention to sell the bank and market rumours have pointed at Mediobanca, who currently owns the other 50%. Doris told the Italian press Mediolanum’s share in Banca Esperia is worth at least €180m.
While pointing out that there is no transaction underway at the moment, Doris told local trade press website Advisor that the reason for the sale is merely that the group wants to develop Mediolanum Private Banking and have all its client under one umbrella.
Meanwhile, Banca Esperia’s performance has been positive in H1 2014, with net profit of €7.6m, up 6% compared with the same period of 2013. The bank’s total AUM was also up 8% compared with the previous year.



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