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The Funding of Sustainable Development. EMN Annual Conference Milan - 5 June 2009. UBI Banca was formed on 1 April 2007 following the merger of the Banche Popolari Unite Group and the Banca Lombarda e Piemontese Group. - PowerPoint PPT Presentation
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The Funding of Sustainable Development
EMN Annual ConferenceMilan - 5 June 2009
2
1888Birth of the Banca San
Paolo di Brescia (BSPB)
1883Birth of the
Credito Agrario Bresciano
(CAB)
1963BSPB acquires Banca di Valle
Camonica (BVC)
1992Acquisition of Banco di San Giorgio (BSG)
by CAB
1998Merger of CAB and
BSPB with the creation of Banca
Lombarda as parent company and contribution of
branch network of CAB and BSPB to Banco di Brescia
2000Acquisition of Banca Regionale Europea* by Banca Lombarda. The Group takes the
name of Banca Lombarda e
Piemontese Group
Birth of the Banca Mutua Popolare della
Città e Provincia di Bergamo then renamed Banca
Popolare di Bergamo (BPB)1869
Birth of the Società per la Stagionatura e l’Assaggio delle Sete ed Affini (later renamed Banca
Popolare Commercio e
Industria BPCI)1888
Merger of BPB and Credito
Varesino (BPB-CV)
1992
Acquisition of Banca Popolare
di Ancona (BPA) by BPB-CV. Birth of the BPB-CV Group
1996
Acquisition of Centrobanca by BPB-CV,
Birth of Banca 24-7 (BPB-CV
Group)2000
Acquisition of Banca
Carime by BPCI2001
Birth of the BPU Banca Group
from the integration of BPB-CV and
BPCI2003
1st April 2007
Birth of UBI Banca following
the merger of the BPU Banca
Group and the Banca Lombarda
e Piemontese Group
*Banca Regionale Europea was created in 1994 following the merger between Cassa di Risparmio di Cuneo and Banca del Monte di Lombardia
UBI Banca was formed on 1 April 2007 following the merger of the Banche Popolari Unite Group and the Banca Lombarda e Piemontese Group
The UBI Group: Predominant Retail Business and Strong Northern Italian Franchise
Mkt Share >= 15%
5% <= Mkt Share < 15%
2% <= Mkt Share < 5%
Market share < 2%
58
18
43
124
103
56
12
121
888
113
6
222
122
8
2
22
1 44
Northern Italy:** 71% deposits 84% loans 65% branches
Group activity focussed on the Retail segment
4 million clients**, mainly retail; at network bank level approx. 77% of revenues are generated by retail customers, 17% by corporate customers and 6% by private banking clients
As at 31 March 2009:
Total loans : 96,9 bln€ (96,4 as at 31.12.2008)
Total direct funding: 95,7 bln€ (97,2 as at 31.12.2008)
Total indirect funding : 73,4 bln € (74 as at 31.12.2008)
Good credit quality: as at 31st March 09, NPL/total loans: 0,98%, net impaired loans /total loans: 1,3% - cost of credit 66 bps
Low risk profile:
Funding mainly from customer base (86%) and limited recourse to international financial markets (14%)
Defensive business mix: focus on commercial customer business, with a non aggressive commercial policy
No exposure to subprime mortgages and related instruments
* As at 26 May 2009** As at 30 September 2008
1.964 branches in Italy + 9 branches abroad
First Italian cooperative banking Group by market capitalization (6,3 bln€*), organized as a federal model, comprising nine network banks and several highly specialized product companies, offering a wide range of financial services and products.
1
Number of branches as at 24 March 2009Market shares as at Sept 2008
3
4
Close to 4 Million Clients with a Very Large Retail Component***
* Calculated as Net Interests + Net Commissions by market over Markets Total (Retail + Corporate + Private)** Includes other Retail clients *** Commercial segmentation: Private: Assets > 500k Euro, Mass Market: Assets < 50k Euro, Affluent: Assets of 50 – 500k Euro; Small Business turnover < 5 Euro Million, Corporate Core: Turnover 5 – 150 Euro Million, Large: Turnover > 150 Euro Million
5
The Group structure (1/2): Multi-functional Federal Model, Highly Integrated at Commercial, Organizational and Financial Level with Centralised Risk Monitoring
Mission
Presence in reference markets
Distinctive capability to understand and serve local economies
Drivers
Service model differentiated by customer segment
Sharing of the same organizational structure
Sharing of tools and services provided by parent company
Mission
Competitive product and services offering, in line with market best practice
Drivers
Continuous product innovation
Ability to listen to distribution network requirements
Mission
Management, co-ordination and control
Leading business functions
Provision of key support services
Centralised risk monitoring
9 Network Banks
Product companies
Parent Bank:
UBI Banca
6
361 branches
358 branches
216 branches
291 branches
259 branches
318 branches
59 branches
52 branches
38 branches924 financial advisors (7)
9 NETWORK BANKS
ASSET MANAGEMENT UBI Pramerica (partnership with Prudential US)
CONSUMER CREDIT B@nca 24-7
CORPORATE BANKING Centrobanca
FACTORING UBI Factor
LEASING UBI Leasing
NON-LIFE BANCASSURANCE UBI Assicurazioni
LIFE BANCASSURANCE Aviva Vita (Partnership with Aviva) Lombarda Vita (Partnership with Cattolica)
ON LINE TRADING IW Bank (listed company)
MAIN PRODUCT COMPANIES
(listed cooperative Bank) provides management, co-ordination, control
and supply of centralized services to the network
(1) and 19.98% by Fondazione Cassa di Risparmio di Cuneo and 19.98% by Fondazione Banca del Monte di Lombardia and the rest by minority shareholders; (2) and 16.64% by Aviva SpA; (3) and the rest by minority shareholders; (4) and 14.15% by Aviva SpA and the remaining by minority shareholders; (5) and (6) by minority shareholders. Data as at 30 September 2008(7) Number of financial advisors as at 31 Dec 2008
100.00%
100.00%
83.36%(2)
59.95%(1)
100.00%
99.29%(3)
85.83%(4)
82.96%(5)
91.16%(6)
The Group structure (2/2)
Number of branches updated as at 24 March 2009
7
Distribution Model Specialized by Market as Enabling Factor of Commercial Approach Differentiated by Segment
Main Characteristics
Private Corporate
Commercial Area Parent Bank
RetailBranch
Network Bank
Retail CorporatePrivate
Private Banking Unit
Corporate Banking Unit
Retail TerritorialArea
Retail
Distribution Structure
Commercial Area
Divisional model (Retail, Private, Corporate) with customer segmentation (Mass Market, Affluent, Small Business, Private, Corporate)
2
Linearity of commercial processes by market between the Parent Company and the Network Banks
3
Relationship with the customers focused by segment with “specialized” account managers (Mass Market, Affluent and Small Business Account Managers, Corporate Account Managers and Private Bankers)
4
Commercial targets by Market and with differentiated KPIs according to the segment’s characteristics
5
Clear separation between commercial and lending processes
1
Commercial Area Parent Bank
General Management
8
Microcredit: Italy in the European context
In recent years Italy has become a high immigration rate Country and according to a recent World Bank Study, the ratio of exclusion from financial services reaches 25% of the population, one of the highest the European Union.
Nevertheless services in microfinance (especially microcredit) are under developed.
Source: Overview of the Microcredit Sector in the European Union 2006-2007EMN Working Paper n. 5
Absence of dedicated regulation
Misinterpretation of the meaning: often considered as a social mean of support (redistribution of wealth – preferential and assistential welfare regime) instead of creation of new entrepreneurial opportunities.
The problems of microcredit in Italy
Political/Regulatory ContextPolitical/Regulatory Context
Microfinance organizationsMicrofinance organizations
General Fragmentation (limited size and geographic distribution)
Difficulty in working with commercial banks (due to the compulsory regulation which must be respected)
Reliance especially on donations / guarantee funds and volunteer activities
Welfare model (very low or no interest rates and reduced attention to default rates)
Difficulty in raising funds
Low medium/long term economic sustainability
Limited results (in terms of credit facilities granted and beneficiaries reached)
Skill fragmentation and lack of scoring models
MFIs from Italy
Context of Activity/ Legal Status
MicrocreditPersonal Loans
FinancingMicrofinance activity
International 6 66,7%NonProfit 4 44,4%Profit 2 22,2%Domestic 2 6,7% 1 11,1%NonProfit 1 3,3% Profit 1 3,3% 1 11,1%Local 28 93,3% 2 22,2%NonProfit 25 83,3% 2 22,2%Profit 3 10,0% Overall Total 30 100,0% 9 100,0%
Source: www.microfinanza-italia.org
Mostly small initiatives promoted on a local level by Public Administration or Banking Foundations.
Almost none grants credit directly, the majority promote Guarantee Funds, leaving the loan facilities to Banking Institutions
Funding model and terms are the biggest weaknesses of MFIs from both Eastern and Western Europe.
Not only lack of funding, but also missing strategy
Funding related needs: Funding related needs:
• Developing fund raising and long term funding strategies
• Funding operational costs relating to growth and to increase outreach
• Funding of incentives to scale up operations
Scale from “1“ – weak to “4“ – strong.
EIF Market Study Microlending (1/3)
Survey Results - FundingSurvey Results - Funding
Operational Model (1/2)
Different funding needs and sourcesDifferent funding needs and sources
• Financing of start-up costs,
• Equity capital,
• Temporary and over-time-decreasing subsidies for operational costs,
• Budget to co-finance specific capacity building activities (Training, MIS, Mutual Exchange, etc.)
Micro-entrepreneur
Micro-entrepreneur
Micro-entrepreneur
Micro-entrepreneur
Microloans non-financialservices
Income subsidies fromnational social welfare
Funding fornon-financial services
(e.g. ESF)
Refinancing Facility(e.g. ERDF/ESF)
Guarantee Facility(e.g. CIP/ERDF/ESF/National
Guarantee Schemes)
MFI
Key findings from the EIF Market Study Microlending: Potential Funding Model for MFIs in the EU
Operational Model Proposal
• Funds for structural investments
• Funds for supporting activity
• Guarantee Funds
• Target Individuation• Communication• Selection and
Support• Territorial Network
•Equity•Territorial Network•Complementary Products and Services
The Expected Partnership Benefits
Equity
Support to the development of the territorial network
Network Banks (“corner in” branches)
Collateral Products and Services for Income Statement integration
Product Companies
Cost Control (synergies)
Institutional Recognition
Specialized Financial Intermediary Financial PartnerSpecialized Financial Intermediary Financial Partner
Positioning in a sector of high social value
Bespoken products focused on the defined target (ex. InItaly for immigrants)
Potential acquisition of new clientele
New bankable subjects
Partners of relevant social organizations