“Ours is an industrial plan that creates the bank for the next ten years”. With these words Charles Messina opened and closed the meeting with financial analysts for the presentation of the Intesa Sanpaolo's new plan. One way to underline the change of skin that is required of the "system bank" to maintain the leadership in Italy conquered to the sound of profits and dividends. For heaven's sake, the priority remains “solid value creation and distribution to shareholders with year-over-year dividend cash growth”. On the contrary. "Year after year - promised the CEO - we will re-evaluate the possibility of re-evaluating the targets, because today we set objectives that we are sure we can achieve, given that the plan is decidedly conservative”. An easy promise, given that "every 50 basis point increase in rates is worth a billion more for us".
Intesa Sanpaolo plan, financial solidity and M&A
But financial solidity, a traditional strong point in the Made in Italy credit flagship, must be placed in a new context, in some ways more challenging but which rests on more solid ground. First of all, the bank has almost completely emancipated itself from the gaps that conditioned the years of crisis marked by the sword of Damocles in suffering. Today, after a massive derisking of already financial non-performing loans in the fourth quarter of 2021, Banca Intesa can set itself the goal of "becoming a bank with zero impaired loans, in practice a sort of Nordic bank which ranks among the best in Europe in terms of the incidence of Non Performing Loans and the stock of non-performing loans'.
The success of the operation could have resulted in the temptation to create a sort of "fortress Italy", resting on the margins guaranteed by the contractual strength of the leading bank. Messina, together with his team, has chosen an opposite path: to aim for theexcellence in the future, which promises to be full of opportunities as well as pitfalls, without wasting energy. Banca Intesa, underlined the number one, “It is not considering no mergers and acquisitions. The excess capital will not be used for M&A in the next few years”. In the midst of the digital revolution there is no value in acquiring a bank that has a large number of branches – he added – “the business model essentially aims at wealth management and protection, while here we see book value multiples that do not create value for shareholders. This is a conservative but industrial plan and the CEO must remain committed to achieving the plan's targets”.
Intesa Sanpaolo plan, technological development
Hence the leap into the future, the result of a careful reading of what is changing in the world of credit, both on the supply side, shaped by the innovations in technological development, and on the demand side, characterized by new customer needs which changes with great speed. Hence the investment (650 million euros) to give off to Isybank, the group's new digital bank. “We have identified 4 million customers who we will serve with a newly created new digital bank, Isybank, which we are developing together with Thought Machine. “Isybank will make us resilient in the face of fintech attacks and competition.” But it won't be a simple defensive action. Ca' de Sass, in fact, has already developed a front of alliances that also involve wealth management and managed assets (the strong points of a plan based on commission profits) with excellent partners: not only thought machine, specialized in banking services for digital natives, but also Aladdin, Black Rock's futuristic Wealth Advisory platform, at the forefront of Robot advisory and Kyriba, a leader in corporate solutions. As well as a series of alliances in the Fintech world also making use of multi-cloud infrastructures.
Intesa Sanpaolo plan, transition and redundancies
In short, a new way to be big, without being unnecessarily big. The plan provides for the closure of 1.500 branches (partly already started) and the voluntary exit of 9.200 employees, of which 2.850 already carried out in 2021. But there are also 4,600 new hires and 8 employees to strengthen the new business segments.
This one will succeed transition to the future? Messina has a precious ace up its sleeve: a 70% payout which “is the highest in the sector in Europe”, but which could rise in the future because, he adds, “'my expectation is that over the course of the plan we will pay much more to shareholders than we announced as a cash dividend”. “I can say – he adds – that we will have a capital position with a significant excess compared to the minimum level that we are establishing”, reiterating that the institute will evaluate any further distributions of capital to shareholders year by year. It is a promise that is worth over 22 billion for the shareholders (6,6 billion for 2022 alone), but even 520 billion for the stakeholders, i.e. for the entire Bel Paese. A good way to be the "system bank" in the future.
