Strategy

Mediobanca Private Bank Positions For New Wealth

Tom Burroughes Group Editor London 12 April 2022

Mediobanca Private Bank Positions For New Wealth

This news service spoke to the head of the Italian lender's private banking arm, asking about strategy, the approach to growth and some current challenges such as inflation and market volatility.

A new generation of Italian wealth creators and high net worth clients will help to drive Mediobanca Private Banking’s business forward as the firm gears up to bring in more staff and resources in coming years, its head says. 

The firm, which recently launched the Mediobanca Venture Capital Fund, is targeting areas such as private market investing – a hot area internationally – as part of its growth strategy. Its business model involves close cooperation between the private and investment banking arms of the group. 

“I see an incredible moment for the private bank in Italy…we have had strong growth in assets under management, with a key focus on private markets,” Angelo Viganò, head of Mediobanca Private Banking, told WealthBriefing in an interview. “We are seeing a lot of liquidity events…from private equity, and IPOs. It has been strong in the past three years.”

The business has developed by providing alternative investment solutions and is doing so via direct investment initiatives through the club deal formula, supporting unlisted Italian businesses and real estate operations, and indirectly through funds in private markets, he said. 

“A unique project in Europe will be launched soon, which will allow the bank's ultra-high net worth clients to co-invest directly in dynamic international companies alongside prestigious private equity funds. For this project, Mediobanca Private Banking will be able to count on the support of a hard core of entrepreneurial families, given the success achieved with the first investments promoted through TEC (Philogen and Jakala), which have reached the exit stage with excellent results,” Viganò continued.

Mediobanca Private Banking has about €22 billion ($23.9 billion) of AuM.

Italy
“This is a particular moment for Italy and the economy…there is a new generation of HNW customers coming…and we are doing a lot to attract the next generation with fintech investments and private market solutions,” Viganò continued. “It is very important for Mediobanca to lead these opportunities in Italy.”

While traditionally a large chunk of HNW and ultra-HNW Italians’ money was banked and managed over in Switzerland, various tax and account amnesties, disclosure agreements and the advent of an Italian version of a “non-dom” regime mean that onshore private banking in Italy is – at least for now – looking relatively robust. Market research group Statista said that total assets under management of the private banking sector in Italy rose “considerably” between 2015 and 2019. As of 2019, the assets under management of private banks in Italy were expected to increase even further in the future, peaking at €986 billion in 2022.

Italy’s private banking sector is varied. Members of ACEPI, or Italian Private Banking Association, to give one example, contains members including Mediobanca, Societe Generale, Vontobel; IWBank; Intesa Sanpaolo; Intermonte; Unicredit; BNP Paribas, Banca Akros, and Banca Cesare Ponti. (The latter body promotes entities such as structured products.) 

Market research group ReportLinker said that Italy’s affluent segment (covering HNW individuals and mass affluent people) accounted for 15.1 per cent of the total population and held 86.0 per cent of the country’s total onshore liquid assets in 2020. 

Mediobanca knows that in Italy, as in other developed countries, entrepreneurs and those HNW individuals building businesses are important revenue channels. Several banks are tracking this market: Deutsche Bank, for example, is targeting Italian and Spanish entrepreneurs, as told to this publication last November

In Mediobanca’s private banking business, private bank customers must have at least €5 million of investable wealth.

The investment bank side of Mediobanca, for example, is important for handling clients’ liquidity events Viganò said.


Non-doms – the Italian version
The UK’s non-domiciled tax regime may be getting political heat at the moment, but Italy has a version of its own, and this develops useful business for firms such as Mediobanca’s private bank. 

Viganò said there’s been a rise of interest among people in relocating to Italy and using its financial incentives. “Milan is particularly attractive for them.”

Non-doms are exempt from disclosing assets held outside Italy because ordinary reporting provisions do not apply. Candidates don’t have to disclose their foreign investments/assets to the Italian tax authorities; and must complete a checklist aimed at providing evidence of their non-Italian domiciled status, focused on an applicant's link with Italy. Italian citizens resident in tax low/no-tax jurisdictions may also become non-doms if they meet certain conditions and tell the authorities.

The new rules, which took force about five years ago, were a reminder to countries such as the UK – having voted for Brexit in 2016 – that European countries want to attract inward investment. Such moves are unlikely to fade, even if governments sometimes suspend schemes in order to curb political controversy.

“In the next months we will see an increase in numbers of people choosing Italy as a country, such as private equity guys,” Viganò said. He referred to Italy's Prime Minister Mario Draghi and the importance of Italy remaining stable politically. 

Trials and tribulations
Not unexpectedly, this publication wanted ask Viganò about current events. 

“Naturally there are a lot of concerns about the Ukraine crisis. Inflation risk is a key point for clients and it is important to offer protection for this type of risk. One of the solutions to protect assets is to invest directly in real assets,” he said. (The bank has no Russian clients.)

Staff in demand
“At the moment it is important to attract talent and we have increased staffing in the last year and will do more…with about 10 to 15 bankers,” Viganò said. Currently, Mediobanca has 90 private bankers in total.

“The growth of private banking in Italy means it is important to capture `capital in motion’ events. It is important to attract the sort of private investment banker…such as if you offer IPO solutions, then it is relatively easy to attract clients after the operation. We want to grow in the next three years by about 20 to 30 per cent in terms of assets and revenues,” he said. 

Leading this development is a challenge that Viganò relishes. Before starting at Mediobanca, he was responsible for the key clients team in Banca Esperia, which he joined in 2009. From 2004 to 2009 Viganò worked at UBS Italia where he served in various capacities becoming the head of the UHNW individuals team for the Italian market. Previously, he was a senior banker at Banca Popolare Commercio e Industria and Banca C Steinhauslin.

“Mediobanca Private Banking is the first Italian private investment bank. It stands out for the consistent and distinctive path taken since its creation in December 2017, which today positions it as the only private and investment bank in Italy. This is also thanks to a highly integrated model that enables it to be the long-term partner of Italy's top 500 business groups,” Viganò said. 

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