Intesa sees Italy private banking growth

GENEVA (Reuters) - Intesa Sanpaolo (ISP.MI), Italy's largest retail bank and a domestic leader in wealth management, expects the private banking segment to continue grow by 6 to 8 percent yearly, the head of its private banking division said.

"In the long run we can experience a rate of growth between 6 and 8 percent (for the sector)," Paolo Molesini, chief executive officer for IntesaSanpaolo Private Banking, told the Reuters Wealth Management Summit in Geneva on Tuesday.

"We think we will continue to grow above the average because we have a competitive advantage which is the synergy with the corporate side of the bank."

Molesini, whose side of the bank manages 73 billion euros ($102.5 billion) of onshore assets and a further 10 billion euros abroad, said he would like to expand the offshore business to serve Italian clients in Switzerland and new clients in eastern Europe.

About 9 billion euros of the private bank's off shore assets are in Luxembourg and only 0.6 billion euros in Switzerland, a presence that Molesini said was too marginal compared with its sizeable on shore activities.

"To build up an offshore private bank in Switzerland and to serve those customers (in eastern Europe) is for us a very important opportunity," said Molesini.

"We are building a platform but of course we would be delighted to find a bank in order to save time," he said, adding he had not yet found a suitable target.

Intesa Sanpaolo has bought various lenders in the high-growth markets of eastern Europe and has now about 7 million retail clients in the area.

FAST-DEVELOPING SEGMENT

Assets of private banking clients in Italy are expected to grow to about 890 billion euros in 2007, preliminary data from the country's private banking association AIPB showed.

IntesaSanpaolo Private Banking shares a large portion of this segment, thanks to its large retail and corporate banking networks.

"Italian private banking clients tend to be entrepreneurs. We have enormous opportunity there. We have contact with more than 95 percent of Italian entrepreneurs," said Molesini.

Molesini said the lack of an extensive network meant foreign private banks were not particularly strong in Italy, with the exception of Swiss bank UBS (UBSN.VX), the world's largest wealth manager.

But since foreign banks, which control about 17 percent of Italy's wealth management market, were recruiting aggressively, this could push up IntesaSanpaolo Private Banking's costs in the long term.

"The 40 percent (cost-to-income ratio) I don't think is sustainable in the long run," Molesini said, noting this compared with a ratio of more than 60 percent at UBS. "I think we will have pressure on costs but we will be able to remain under 50 percent."