Banca Generali, controlled for over 50 per cent by the insurance company, closed 2020 with a net profit of 274.9 million euros, but above all with an increasingly defined role in the segment of asset management over 500 thousand euros. Gian Maria Mossa has been at the helm of the bank for four years.
A move, in a terrible 2020 for many reasons, the resilience of the financial system is one of the most comforting signs. Especially for those banks that had already invested in digital transformation or advisor networks. How well has Covid-19 been good for your accounts?
The first observation that the pandemic has favored the digital transformation in the world of savings in Italy, accelerating the migration from the traditional banking system to specialized banks in certain customer segments. Category numbers cannot be random. I am therefore referring not only to Banca Generali, but also to other important operators who have done very well: we have had a double-digit acceleration of our respective businesses, in a year in which no new wealth was generated, but in which answers were sought. to new needs. Then, we must consider that this is an industry that has been growing at this rate for years and that has a central role in Italian savings. In seven years, since 2013, we have tripled the value of our assets under management. We were at 25 billion, we are close to 75 billion. Likewise, the entire sector maintains ample room for growth. In the United States, managed savings intercepts about 60 per cent of the total, in Italy we are still between 15 and 20 per cent of the total.
The savings sector appears to be doing better than traditional banks.
This change in the market, in my opinion, has not yet been fully perceived. In a scenario in which traditional banks are going through an important moment of consolidation and reorganization, awareness is emerging around the networks sector which manages an increasingly important part of savings, with certainly stronger growth rates than commercial institutions.
Effects that are reflected on the dividend.
We propose to pay a total dividend of 3.3 euros in two installments at the next meeting. A first tranche in the fourth quarter of 2021 of 2.7 euros and a second one, in the first quarter of 2022, of 60 cents. At current prices, these payments correspond to a dividend / yeld ratio of more than 11 percent and 70 percent of the profits accrued in the two-year period 2019-20. A figure that is higher than what we have committed to paying in front of the market, or 1.25 euros per share of annual dividend. All while continuing to grow as a business and increasing capital strength.
You are rewarded by the country’s expected digital transformation.
Digital, not as an end but as a means, has become fundamental in operations. It favors closeness in the relationship of trust between banker and customer and even in these very complex months during the pandemic, it has allowed families to accompany families in the most important planning decisions. But in addition to strengthening in the sphere of savings and in the challenge for digital, this crisis has traced a third important trend: the need for protection. The crisis has sharpened perceptions of vulnerability and criticism, and this is leading to a reconsideration of priorities by many families, both in personal and professional views. This leads to a greater demand for security, because people feel the very element of vulnerability stronger than before.
A crisis, the one triggered by Covid 19, destined to leave its mark.
The structural effects of this crisis will be profound and prolonged over time. Many think the consequences will be limited to the retail markets, to small shopkeepers. I am convinced that it will not be so, I think that the pandemic will also leave traces in industry, up to medium-sized companies. The banking system and private banking operators must be ready to give support to businesses, including in the field of governance and generational succession.
What do you think of the Draghi effect on the markets?
Draghi has already changed the perception of country risk. It has a unique standing and from a professional point of view capable of making things really change and everyone’s attitude towards Italy.
The spread seems under control.
I am confident that this executive will bring Italy closer to Europe. And we hope to return to a lower level than those of the peripheral countries.
Your business model is gradually breaking away from the traditional banking business. Wealth management is more profitable than money management.
We are a bank capable of growth, capable of remunerating shareholders and that depends to a lesser extent than our competitors on the characteristic business of being a bank. This makes us, in my opinion, unique. And this is demonstrated by the fact that in private banking, therefore in the management of assets exceeding 500 thousand euros, Banca Generali third in Italy, behind only Intesa Sanpaolo and Unicredit, with almost 50 billion of assets, two thirds of our total assets.
How many bankers are there at Banca Generali?
We arrived at 2,086. We are the only company that, in the last seven years, has grown every year both in the number of bankers and in the average value of the overall portfolio of each banker. And in these first two months of 2021 we have already hired around thirty very smart young bankers.
What is the average portfolio of your banker?
We are about 35 million. Consider that the average of the entire financial advisors industry is just over 23 million, and therefore we have a much higher ranking at the top of the sector. These are numbers that make us think, also because it has not always been this way. In 2006, when the market average for portfolios was 12 million, we were 7 million. This gives an idea of how much Banca Generali has changed in 15 years.
Savings by Italians have reached hyperbolic figures. There have been many attempts, but they have not yet succeeded in transferring this enormous resource into the real economy. This huge capital continues to sleep in current accounts.
For banks, it must be said, the money in the current account has historically represented an opportunity for profit. A kind of free meal. This has gradually disappeared because the return from the use of liquidity is affected by low interest rates and economic difficulties. In Italy, let’s not forget, 0.2 per cent is paid on savings every year. So, in fact, an asset is already there, and in ten years it is worth 2% of Italian savings. There is for the exemption on checking accounts. If you look at the long-term investment needs, the current facilities can certainly be improved. An example concerns the level of deductibility of € 5,164 which risks not being sufficient for complementary pension projects, when the concept of deductibility more accessible in the immediate future could be introduced.
The recent step, which provides for a sharing of the possible losses of those who invest, with an indemnity from the government of up to 20 percent of the negative result, tends to change the existing logic, encouraging private intervention.
started a crucial year.
As an Italian system, we have sold some leading companies in the sector. Fortunately we have a couple of very strong national champions, overall the sector is getting poorer. To avoid losing further competitiveness, it is necessary to try to stimulate their development, both in liquid and illiquid instruments, which are important for bringing private savings closer to businesses. An important lever to talk about sustainable growth in our country. I hope that the government, once the emergency of the first weeks is over, can work to promote culture in this sense.
Do you really think such a change is possible?
I sincerely think of six working groups developed in the last year at different levels between institutions and companies, not only in the sector, they all agreed in the opportunity to enhance the savings industry for the advantages it can generate.
Will Italy suffer the effects of the trade war between the United States and China?
Many are looking to Asia with interest. I believe that at the end of the pandemic, all of Asia and China in particular will be in an advantageous position vis-à-vis the rest of the world. Even with respect to the United States, which in recent times has produced an enormous amount of monetary and fiscal stimulus and will soon find itself, in my opinion, having to face increasing inflationary pressures, in addition to the already known social problems. Themes that could also affect currencies.
He started the third year of his term.
We are a different bank from what we were even in 2018. The next three years will be a period in which Banca Generali will have to continue to grow. This means that a strengthening of our positioning is also envisaged in the industrial plan we are finalizing. That then this can be reached only for internal lines or even for external soon to say. We must then accelerate the internationalization process which does not only mean going to develop a presence in Switzerland, but which means opening up a series of options for our customers, even abroad. And being part of a large international group certainly helps. And more generally there is a theme of transformation of the business model and we must think of the technological machine in a different logic.
She talks about the next three years, so consider Mossa still driving.
The Generali shareholder with whom there is full agreement will decide; it is an honor for me to lead this team in the Lion group.
Here, the relationship with the shareholder?
Really very positive and constructive. There is an industrial partnership that is bearing fruit. I sincerely believe that when it comes to insurance skills, Generali is number one in Europe.
Everyone is talking about Bitcoin and the Blockchain. You have invested in the sector.
We made an acquisition, investing up to a maximum of around 14 million euros and entering the capital of the scale up Conio. We did it because blockchain technology will be part of our future and we want to study its synergies. While on bitcoin it is possible that there is also a strong theme of speculation, on the validity of blockchain technology for the tokenization of assets, or real digital currencies, it is impossible not to seriously put your head to study the opportunities.
Speaking of speculations. In recent weeks there has been the Game Stop case. Don’t you think that the various platforms, more or less social like Robin Hood, can erode market shares for operators like you?
I think the protection of savers is important. I would like to know what those who have bought Game Stop on the maximums think about it and in a few days have seen their investment almost zero. Having said that, I also believe that platforms as such are a democratic expression and that they facilitate market access. No it must risk becoming a fashion phenomenon, and I believe that it is the Regulator’s task to intervene to protect the weakest. If you turn online trading into a social game, the risks are very high. The importance of a professional who guides us in the most important choices for our financial planning remains fundamental. And this is why I see a great future for Banca Generali.
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