Intesa SanPaolo Private Bank deputy CEO Saverio Perissinotto is confident that client money will start flowing into Italy during the final quarter of this year, once there is clarity on plans by the G20 nations to provide tax amnesties for clients with undeclared wealth overseas.
Client money will start to flow out of Switzerland more quickly in the final quarter of the year as European tax amnesties start to kick in, according to the deputy CEO of Intesa SanPaolo Private Bank.
In an interview with Private Banker International, Saverio Perissinotto said the focus on onshore asset gathering could intensify as European governments move towards declaring tax amnesties for individuals that have undeclared wealth overseas.
Perissinotto said he does not expect to see client inflows start until the final three months of 2009, when there is more clarity from the G20 nations on their plans.
“It is likely we will see inflows of money coming back into the country when that happens,” Perissinotto added.
He said the level of inflows would depend on the terms of the amnesty, and said he understood there could be obligations for clients who choose to bring money back onshore, including what types of investments are made with the money when it returns to the client’s domestic jurisdiction. Both of those will determine the overall success of such a programme, he said.
The shift to onshore wealth management services could give private banks linked to retail banking franchises like Intesa, the edge over their rivals because they can leverage the parent bank’s branch network and client base, particularly in the current climate.
All wealth managers are suffering a profitability squeeze, but those which have established onshore networks should be able to grow their business more easily if they can persuade clients they have a differentiated offering.
“A sales network which has a presence in the whole country is important, particularly in Italy,” said Perissinotto.
“People see themselves as coming from Rome, Naples or Torino first, and after that they see themselves as Italian, so you have to behave and do business differently in different places. If we have branches in these places, it allows us to more easily capture business.
“The big players might come over to Italy and make a pitch to Silvio Berlusconi, Luciano Benetton or other high-profile wealthy clients, but Italian families have lots of wealth that’s based in the regions and is not necessarily known by the big names.”
As well as the increasing importance of the onshore network, Perissinotto said the other main issues in Italy currently were shifting client priorities towards their wealth managers and declining profitability.
“The landscape of private banking players has completely changed,” he said.
“In the past we have been challenged by the glamorous foreign institutions, but they are not in the same shape they used to be in. We are witnessing a flight of capital to more traditional institutions with healthy balance sheets, because counterparty risk is still a perceived issue among clients [following the Lehman Brothers collapse].”
Intesa has 100 dedicated private banking branches in Italy, with 1,200 staff, 650 relationship managers and €65 billion in assets under management, excluding its fiduciary business. Around one third of its AuM is discretionary, another third is in mutual funds and trusts, with the remainder in securities, bonds and current accounts held on behalf of clients.
Perissinotto added the bank is currently focusing on increasing the number of clients on discretionary mandates, which tend to be more profitable for the bank and work out better for clients.
“We are explaining to our customers that, at the end of the day, if they give us a discretionary mandate we tend to do a lot better then they do by managing it themselves,” he said.
“We are saying to them that markets can go up and down, but if you’ve got the guts and a medium term perspective, this is a moment we can catch opportunities in the markets.”
Intesa owns Banca Fideraum, a separate financial adviser network, which had €40.2 billion under management at the end of 2008. An investor presentation said the bank had total net inflows €2.9 billion in 2008, a figure which included client assets in its retail, private and Fideraum networks.
The Italian wealth market’s always had a big offshore dimension – with Ticino, Monaco and San Marino among the favoured destinations.
And that’s unlikely to change much. It’s not clear whether another formal scudo fiscale, along the lines of those in 2001 and 2003, is planned. But even if an amnesty does get the go ahead, the terms will be restrictive and the resulting asset flows limited. So I wouldn’t be pinning much hope on that in my business planning, if I were running an onshore bank.
The bigger challenge is to be more proactive in capitalising on foreign banks’ misfortunes, raise the profile of local private banks and educate Italian clients on the real benefits of a more disciplined approach to wealth management. There is still far too much wealth sitting in retail accounts. There are also real opportunities to capture pockets of wealth outside the relatively well-penetrated North.
• David Maude, Verona-based independent consultant