Alberto Mancuso, head of retail financial networks at Intesa Sanpaolo’s (ISP) investment bank Banca IMI, spoke to SRP about the firm’s plans for 2014 and how its client-centric approach and geographic coverage has bolstered the firm’s profile in the Italian structured retail products market.
The Italian structured products market has gone through a process of consolidation. What are the key elements necessary to be a successful player in the Italian market in the current environment?
The first key to our success has been the relationships we have created over the course of the years with our distribution counterparts. We have always worked with a partnership view: the distribution network, in fact, identifies the needs and investment objectives of their private clients, registers their interest and brings them to the attention of Banca IMI. In this phase, one of the main activities of Banca IMI is set in motion: our dedicated structuring team, delivers appropriate product solutions to meet the requirements of our partners.
Having an efficient network that recognises the needs of clients and has a wide presence throughout the territory we cover has allowed us to build a reliable platform and an efficient issuing process.
Is having a wide product range the only element to meeting clients’ expectations?
We have a wide range of products, constantly adapted to the changing market conditions and the needs of different clients, and we continue to train our distribution networks (particularly, those related to the ISP network).
However, we also have a significantly short time to market, and provide a high-quality pre- and post-sales service, especially in terms of marketing literature, information and product data sheets, which are clear and easy to understand. We also pride ourselves on the strong focus we give to the secondary market, by which we mean servicing products listed in regulated markets, market trading facilities and achieving tight bid/offer spreads.
Banca IMI’s credit rating and the market’s positive feeling towards the whole ISP Group has also supported the growth of our business.
What differentiates Banca IMI’s offering from its competitors?
The business of structured products is characterised by a high level of replicability of investment solutions. Pricing models of payoffs or the underlying assets used in devising an investment product do not represent barriers that are difficult to get over for players already active in this business. Obviously, first movers do enjoy a competitive advantage in financial engineering, although competitors are usually able to quickly close the gap.
The distinctive element in Banca IMI’s offering is to be found in the high quality of the investment proposition from which stem a range of solutions that are, at the same time, both financially efficient and very cost-effective. Moreover, investment solutions must be put together on the grounds of a strong case based on an in-depth analysis of the expectations of the investor – and of the market! – on the asset or assets chosen as the underlying of the product.
Picking the right wrapper is also of paramount importance when coping with the different needs of investors to which your offer is targeted. A strong focus has to be set, for instance, on the fiscal efficiency of one product compared with another, on legal constraints, and so on.
Banca IMI’s distinctive elements can be seen in the service model, in the bank’s in-depth knowledge of the market and also in how we maintain strong relationships with our customers and distributors. Last but not least, I would stress the strong synergies we achieve with other product factories in the group.
What are Banca IMI’s plans for 2014?
Banca IMI’s plan for this year is to work in widening our range of products, introducing new combinations of payoff/underlyings that will show appealing yield/risk ratios. We will also focus our efforts on structured asset management solutions.
Leaving product evolution out of consideration, we aim to widen our activity with old and new partners, as well as to replicate abroad the success we have achieved in Italy so far.
What challenges do Italian market players face in 2014?
Regulation is one of the biggest challenges we will have to face during the upcoming months and years.
Change in existing rules, and the introduction of new ones, will have quite an impact both on issuers and on distributors – they will need to quickly adjust their structures, offers and models to keep up.
That will be coupled with the usual high uncertainty about future developments in the financial markets, with the consequent difficulty, even more than in the recent past, in finding investment solutions that can satisfy the performance expectations of end investors against the background of the general trend of reduction in credit spreads and the low interest rates we have witnessed over the past couple of years.