Mediobanca makes wealth management push to boost returns

view original post

MILAN, May 24 (Reuters) – Mediobanca (MDBI.MI) will embark on a hiring spree to boost its wealth management sales force by a quarter under a new three-year strategy, as it strives to make the division its main growth driver.

After hunting for years for a wealth management target and studying a bid for Banca Generali (BGN.MI), Mediobanca said it would leverage its exposure to the ultra-rich, which is twice the average of other listed asset gatherers, and its advisory business, to close the gap with rivals in terms of size and profitability.

Mediobanca said it would reposition its offer of both liquid and illiquid products and provide investment banking services to rich customers such as business owners.

Total revenues are forecast to rise on average by 6% a year to 3.8 billion euros in 2026, with consumer finance accounting for over a third of the total, followed by wealth management and corporate investment banking (CIB).

Wealth management will be the main contributor to fee income.

After announcing last week the acquisition of London-based tech advisory firm Arma Partners, Mediobanca said it would lift non-domestic CIB revenues to 55% of the total, from 40%, focusing on advisory and reducing risk-weighted assets linked to these activities.

As Chief Executive Alberto Nagel prepares to seek another mandate in the autumn, Mediobanca pledged to boost shareholder rewards by more than two thirds to 3.7 billion euros.

Confirming a 70% cash payout ratio, it will introduce an interim dividend and buy back up to 1 billion euros of its own shares.

Shares rose 3.3% in early trading, bucking a 1% drop in Italy’s banking index (.FTITLMS3010).

“We consider the targets to be ambitious but achievable and particularly appreciate the more generous shareholder remuneration (12% annual return),” Kepler Cheuvreux said.

Helped by accounting benefits on its stake in insurer Generali (GASI.MI), Mediobanca forecast a core capital ratio above 14.5%, above a 13.5% minimum.

The gap, which Jefferies calculated was worth 500 million euro of capital, will give it room for acquisitions of capital-light, fee-boosting businesses.

($1 = 0.9084 euros)

Reporting by Gianluca Semeraro; writing by Valentina Za

Our Standards: The Thomson Reuters Trust Principles.