What do we know about Intesa Sanpaolo and how it managed to prosper against unfavorable market forces destabilizing the European banking industry?
The 2020 ‘Bank of the Year in Western Europe’ according to The Banker’s Bank of the Year Awards is on our radar today.
About the bank
To be precise, Intesa Sanpaolo is not a bank, it’s a banking group. As a group, Intesa Sanpaolo Spa was created on 1 January 2007 through the merger of Banca Intesa and Sanpaolo IMI. However, when you dig deeper, over 300 institutions of various kinds (banks, pawnshops, credit companies, public law entities, and more) from 189 Italian locations had to merge for this ultimate result.
The company’s profitability has had its ups and downs. Moreover, the fluctuations were quite steep. For instance, its annual revenue for 2017 was $58.294B, a 204.78% increase from the last year. However, 2018 brought a 63.79% decline in profit. That rebound in 2019 with a 146.79% revenue increase.
In the first nine months of 2020, the bank reported a stated net income of €6,3 billion. When they take into account the acquisition of rival UBI, a net income of over €3 billion may be recorded. The result surpassed the group’s expectations, beating the financial targets set for that turbulent year.
Between July 2017 and September 2020, the market cap of this Italian banking group on the Milan Stock Exchange decreased from €49 billion (July 2017) to €31.2 billion (September 30, 2020). The sharpest fall was registered between February and March 2020, when the company’s market value decreased by around €12.8 billion in a day. Shortly after, in April 2020, the market cap of Intesa Sanpaolo recorded an all-time low value at €25.2 billion. Yet, as of now (January 15, 2021), the company almost restored its previous high market value – growing to €45,02 billion.
The Group offers its retail and corporate banking services to 14.6 million customers in Italy through a network of about 5,360 branches. It also has more than 1,000 branches and 7.2 million customers abroad. As of 30 September 2020, the Intesa Sanpaolo Group had total assets of almost €1 billion.
The organizational structure of the Group is made up of a few divisions:
- The Banca dei Territori division (domestic commercial banking), responsible for retail, exclusive and SME customers. That division is also responsible for serving non-profit customers, industrial credit, leasing and factoring, a platform for direct channels, and instant banking with Banca 5.
- The IMI Corporate & Investment Banking division, responsible for corporates, Financial Institutions and Public Administration. The division operates in Italy with a network of 25 branches which serves 16,000 customers. It is also present in 25 foreign countries through a specialist network of 3,900 correspondent banks to facilitate the cross-border activities of its customers;
- The International Subsidiary Banks division present in the countries of Central-Eastern Europe, the Middle East, and North Africa, with 7.0 million customers in 12 countries, through 970 branches;
- The Private Banking division dedicated to 94,000 private clients and High Net Worth Individuals;
- The Asset Management division that includes Eurizon, with €263 billion of assets under management;
- The Insurance division represented by Fideuram Vita, Intesa Sanpaolo Assicura, Intesa Sanpaolo Life, Intesa Sanpaolo Vita, Intesa Sanpaolo RBM Salute with direct deposits and technical reserves of €170 billion.
Initiatives and projects
Except for its financial activities, Intesa Sanpaolo hosts a range of social and educational initiatives. Its Social Initiatives department partners with non-profits, public bodies, and other companies to distribute free meals, medicine and clothing, boost emergency accommodation, support families with sick children who require rehabilitation and treatment, improve the care model in the long-term pediatric wards, fight child poverty, etc.
Intesa Sanpaolo Innovation Center carries out the Startup Initiative – an end-to-end program for high-tech start-ups. It gives startups knowledge and analysis of the market opportunities, holds training workshops and networking sessions, provides acceleration opportunities on behalf of the Group’s corporate clients. The Innovation Center also founded Artificial Intelligence laboratories in Turin, Neuroscience laboratory in Lucca, and the Circular Economy Lab in Milan.
Neva Finventures – the Corporate Venture Capital vehicle of Intesa Sanpaolo Innovation Center, founded in 2016 – invests in FinTech companies that can grow through possible synergies with the Intesa Sanpaolo Group, in high-tech companies in a phase of growth and expansion, as well as in venture capital funds (FOF).
As the coronavirus crisis unfolded, the Intesa Sanpaolo charity fund donated €1 million to scientific research. Further €100 million-donation went to the Civil Protection Department to strengthen the National Healthcare System. Moreover, Intesa Sanpaolo made its online crowdfunding platform ForFunding available to the government entity.
The bank made €50 billion in new credit available to small businesses to provide liquidity and enable remote work. The #lavorodacasa initiative promoted by ForValue and Euroconsult offered a leasing opportunity for laptops and connected devices. The service included both the delivery of laptops to the doorstep and a complete setup of the new workstation.
With a loan book of €450 billion at Group level – equal to over 25% of Italian GDP – Intesa Sanpaolo has increased the total amount of credit available to address the COVID-19 emergency to €50 billion in April 2020. In addition, it suspended loan payments for families and businesses.
The Group was also responsible for the production and promotion of the free course “COVID-19: a practical guide for healthcare professionals” helping nursing staff who have had no direct or continuous experience in intensive care units before the COVID-19 emergency to accommodate to new realities.
News and plans for the future
In the process of integration of UBI Banca into the Intesa Sanpaolo Group, the issue of enabling generational change at no social cost arose. According to the agreement signed on 29 September 2020 with relevant Trade Unions, the Group intends to accept over 7,200 voluntary exit applications, while hiring a total of 3,500 new employees.
In the first quarter of 2021, the Italian bank plans to launch operations of its first full-fledged Sydney office. The transformation from a representative office to the operational branch was authorized by the Australian authorities in the last few days of 2020. Intesa Sanpaolo will become the first and only Italian bank to have a branch in the country.
Since 2016, it’s also been the first Italian Bank in Qatar, with the only Italian banking network operating directly in the Persian Gulf. Quite recently, Intesa Sanpaolo signed a letter of intent with the Qatar Foundation for Education, Science and Community Development in Doha to promote cooperation between the two countries on business innovation. Under the project, start-up companies in the two countries will be encouraged to strike partnerships, make joint-ventures and reciprocal investments in innovative technologies.