The Wealth Management division will be the cornerstone of our growth in the next few years. According to the forecasts in our 2019-2023 business plan, it should achieve a revenue base of €0.7 billion and profitability (ROAC) of 25%. We will invest significantly to drive growth in this area, mainly by expanding the sales force and developing new technologies to improve customer contact and service, and we will continue to evaluate acquisition opportunities.
An attractive sector in the long-term
The Italian wealth management market is driven by positive secular trends (i.e., variations measured in the long-term).
- The wealth of Italian families is vast, growing and still largely “unmanaged”. According to estimates, it totals €10 trillion, roughly €4.4 trillion of which is in financial assets, and 65% of this wealth is not managed.
- The current negative interest rates are increasingly leading affluent and private banking customers to search for returns.
- The digital revolution and fintech are changing the distribution paradigm, particularly among affluent customers.
- Specialized and mixed wealth managers (banks with dedicated sales networks) gain market share to the detriment of universal banks.
- New consumer protection regulations and current digitalization trends are reshaping the industry.
The 2019-2023 strategic guidelines
Although it consists of both long-standing businesses (such as our Private Banking platforms) and relatively new entities (CheBanca!), the Wealth Management division is a recent business area for the Mediobanca group in terms of its operating structure and the role it plays today. This has enabled us to structure a complete offering with native characteristics that perfectly respond to the current market context, meaning we can now concentrate exclusively on growth.
Over the next four years, Mediobanca Wealth Management aims to definitively emerge as a distinctive, profitable player in order to become:
- a consolidated leader in the affluent customer segment based on the quality and sustainability of its digital and in-person offer and products;
- a leader in the HNWI/UHNWI segment, with a unique private bank/investment bank model.
Investments in distribution, technology and products
Over the next few years, we will invest substantially in distribution (expanding our sales force by 60% to more than 1,400 professionals), technology and products
Repositioning of the CheBanca! brand among affluent customers
Originally founded in 2008 as a digital bank, over the past three years, CheBanca! has focused on developing the wealth management business, significantly increasing volumes, revenue and profitability. With its innately sustainable and technologically cutting-edge approach, CheBanca! has what it takes to make the most of market opportunities, consolidating its role as a wealth manager for affluent customers.
The actions in the repositioning plan focus on:
- more effectively segmenting prices and services based on customer needs;
- promoting Mediobanca/CheBanca! brand investment products;
- creating a new service model with an improved segmentation of customers to better personalize products and services;
- expanding distribution by investing significantly in people: the sales force will grow from 780 to over 1,270;
- strengthening the digital platform by reinforcing mobile, app-based and remote advisory services;
- expanding the range of products, promoting the group’s expertise;
- investing in ongoing network training to ensure high-quality advisory services.
Growth in Private Banking
Mediobanca Private Banking (MBPB) and Compagnie Monégasque de Banque (CMB) are two prominent private banking brands in Italy and Monaco. With solid reputations forged over the years by serving a loyal base of customers, they enjoy a unique market position that puts them at the forefront in terms of growth and profitability.
Over the term of the plan, we will increase the number of private bankers by 20% to 160.
- Mediobanca Private Banking will focus on independently generating and promoting exclusive private asset investment opportunities for its customers seeking diversification and returns. The development of Private Banking synergies with the CIB business will enable a more complete integration of services for mid caps, with direct benefits for our business owner customers.
- Compagnie Monégasque de Banque will expand its investment and advisory offer to family offices as well, with a more segmented approach, and will invest in technologies and fintech to achieve efficiencies and ensure higher service levels.
Specialized asset management boutiques
The continuous development of the specialized asset management boutiques will enable our WM division to offer our customers unique, innovative and distinctive products while maximizing the benefits of the value chain at group level.
The financial targets in the 2019-2023 plan
By the end of 2023, the Wealth Management division will increase its contribution to the group’s results through:
- growth in total financial assets (TFA) of 8% to €83 billion, with an 11% increase in AUM/AUA to €59 billion;
- an increase in gross profit margins to roughly 90 bp (+8 bp over four years) through greater synergies with the specialized asset management boutiques and improvements in the quality and average size of portfolios, while maintaining fair prices compared to industry averages;
- consistently high-quality, sustainable revenue, which will grow by 8% to €0.7 billion;
- constant cost control and greater efficiency, with a cost/income ratio down to 70%.
These combined actions will fuel a rise in profitability, with a ROAC up from 16% to 25% over the term of the plan.