The big banks have been declaring for some time that they want to return to the territory and to give substance to their intentions, they draw up plans that envisage radical changes in their organizational configurations. With a trend reversal compared to a few years ago when system banking was fashionable, they are repositioning themselves on smaller markets by reducing hundreds of useless branches, elephantine instrumental companies, thousands of employees and outsourcing numerous back office activities.
Basically, to respond more effectively to the credit demand of local markets, decision-making decentralization should quickly take the place of centralization until recently pursued with absolute determination and, in some cases, even beyond any reasonable sense of the limit. After the goals of gigantism pursued for many years by highly qualified managers, we need to ask ourselves whether this turnaround can really be achieved by the new top management recently put in charge of the major banks. Above all, we must ask ourselves whether this reversal can take place in a period of time consonant with the growing financing needs of the real economy, now close to asphyxiation due to lack of credit.
The doubt is legitimate, if only because of the importance of the obstacles that will have to be overcome in terms of repositioning and downsizing of the distribution network and personnel reduction, to the point that the extent of the problems to be faced is, more and more often, assimilated to a real process of industrial reconversion, therefore highly complex strategic, managerial and operational. Are these industrial or recovery plans feasible and above all credible? Let's leave out the macroeconomic variables taken into consideration – in themselves, especially in these times, questionable and subjective – and let's focus more on the bank model that one has in mind when designing scenarios over time. The analysis of some of these plans which have been uncritically taken up by the specialized press and do not allow us to glimpse a basic philosophy which is in some respects worrying. The big banks set themselves two main targets:
1) the online bank with the partial overcoming of the branch network and a fading productivity model;
2) from the volumes -of intermediation- to a model of productivity from services.
There is therefore the evolution towards more fee-based business logics and consequently a greater production of commissions paid by customers. There are two main and striking contradictions that seem to us not to be adequately underlined:
a) the return to local development dynamics in the intentions of the big banks does not correspond to greater financing of the local economy;
b) the emergence of online banking implies a drastic reduction in commissions on payment services, asset management, etc., exactly the opposite of what is advocated as a godsend in the above projects.
An example taken from this year's report by the Governor of the Bank of Italy (p.280) and referring to payment services clearly demonstrates the trends also underway in the Italian retail market of a substantial reduction as it moves away from card to electronics.
Commissions applied to customers on the main payment services (amounts in euros)
Bank transfer arranged with traditional methods 2,80 (2010) 3,10 (2011)
Wire transfer arranged via the internet 0,64 (2010) 0,55 (2011)
Direct Debit 0,64 (2010) 0,70 (2011)
Collection order (pre-authorisation) 1,21 (2010) 1,03 (2011)
ATM withdrawals (incl. same bank) 0,19 (2010) 0,27 (2011)
Payment by POS card 0,82 (2010) 0,82 (2011)
The condition of the local banking system is historically different, which, nomen-omen, have always been in the area, even if they are paying a progressively high price in terms of survival. Two data taken from Dr. Annamaria Tarantola's report "on tomorrow's cooperative credit" of December 2011 are the background to their development dynamics and heavily condition their future. At the end of 2011, there were approximately 2.700 municipalities in which there was at least one branch of a mutual bank and the mutual banks, which represent 5 per cent of intermediated funds in the banking system, have 13 per cent of the branches in the system.. This reveals a high territorial concentration of companies of this type which raises serious doubts when it comes to mergers to solve their many problems which is accompanied by a widespread presence of the territory, but which has now become very expensive.
If it is the big banks that close the branches, let alone how urgent the same problem is for the mutual banks which evidently have a productivity per branch much lower than 50% of the system average. The final result of these business logics - regardless of the serious problems of credit quality and liquidity - translates into operating costs which in 2011 were equal to the interest margin (4 billion euro), with an overall net profit of just 312 million euros, ie equal, for the 411 Italian BCCs, to less than one million per capita, according to what is set out in the Governor's Report and in this year's Report to Parliament and the Government of the Bank of Italy. If we are dealing with trends that are not just cyclical, it is quite clear that the intermediation structure for these territorial banks is heading towards a sad epilogue.
For the CBs, therefore, it is a question of setting corrective measures that are perhaps more drastic and unpopular, but no less courageous than the other Italian banks, which are in any case necessary to inescapably modernize their role. They pertain to:
a) requalification of credit policies in favor of short-term credit to companies in its reference market;
b) improvement of corporate governance, to be cleared above all by the risks, unfortunately more widespread than in the past, of conflict of interest of the representatives with the bank they manage;
c) review of the company operating machine in the direction of greater efficiency, with adequate technological/organisational solutions !3 both for cost control and for the need for more qualified banking services also expressed by customers in minor markets.
These factors must be considered by local banks as well as individually, especially in their interconnections, and be supported by more complex funding strategies but also more attentive to risks (maturity and interest rate) than those pursued up to now, in order to make the the constraints deriving from the current general situation of the financial markets.
