Roberto Nicastro Unicredit Group


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Roberto Nicastro Unicredit Group

  1. 1. 30th Efma Convention: Leadership in retail fi L d hi i t il finance 13 p.m. & 14 March 2008 - Paris Roberto Nicastro Deputy Chief Executive Officer Unicredit Group
  3. 3. Unicredit saw an exceptional growth, pursuing a diversification p path that led to a strong internationalization g TOTAL REVENUES EMPLOYEES BRANCHES (€ bn) 1993 PRIVATISATION: Credito Italiano first Italian State-owned bank to be privatised 2,2 17,158 814 1998 – 2000 UNICREDITO CREATION AND INTEGRATION: 9,3 65,047 3,931 merger and integration of 7 Italian banks REORGANISATION BY CLIENT SEGMENT: 3 2001 – 2003 segment banks established 10,5 69,062 4,563 HVB GROUP MERGER AND INTEGRATION: new 2005 – 2006 Group full divisionalisation; mergers of Group banks in 23,5 (2) 132,480 (1) 7,269 CEE countries CAPITALIA MERGER: strengthening position in Italy 2007 29,9 Expected NEW ACQUISITIONS IN CEE: announcement of two 169,816 (3) 9,633 new deals in Ukraine and Kazakhstan 3 (1) KFS Group consolidated proportionally (2) IFRS (3) Full Time Equivalents, with KFS at 100%
  4. 4. Unicredit now ranks among world wide top players Market Cap in Eurozone (Euro bn)1 Market Cap World Wide (Euro bn)1 SCH 70.8 ICBC 181.0 UniCredit 64.7 CCB 119.9 IntesaSP 59.7 HSBC 113.5 BNP Paribas 56.8 BoA 110.3 BBVA 49.5 49 5 Bank f China B k of Chi 105.1 ING 46.8 JP Morgan Chase 91.8 Deutsche Bank 38.5 Citigroup 84.2 Soc Generale 36.6 SCH 70.8 Fortis 30.7 Mitsubishi UFJ 64.9 Credit Agricole g 30.8 UniCredit 64.7 1) As of 21 January 2008 - Source: Thomson Financial 4
  5. 5. With a unique broad foothold in Europe 0,5-1% 1%-3% 1% 3% 3%-10% >10% 5
  6. 6. This generated some complexity UNPARALLELED EUROPEAN FRANCHISE B ki operations i 23 countries(1) Banking ti in ti More than ~40 million customers About 10,000 branches FOUR CORE MARKETS Italy: #2, ~16% market share(2) Germany: #3, ~5% market share(2) Austria: #1, ~19% market share(2) SPREAD REVENUE PORTFOLIO CEE: the biggest investor in the region Total Revenues Other 8% GLOBAL PRODUCT FACTORIES CEE 18% MIB: a strong regional player with leading position in CEE Italy 47% (#2 ECM and M&A in 2006) Austria 10% Pioneer, a global player: AuM(3) ~290 bn Leasing: European leader as for new production(4) Credit cards: a strong platform with ~11 mln credit cards issued, Germany 17% ( f which 6 5 mln i CEE(5)) #5 i E (of hi h 6.5 l in ), in Europe and #1 i T k d in Turkey NOTE: Year-end 2006 data, referred to UniCredit + Capitalia + ATF +USB Groups (combined pro-forma) pro forma) Source: UniCredit, Capitalia, ATF, USB 2006 data (1) Including 6 ATF (2) Market shares and rankings calculated on customer loans, considering only loans to domestic customers for Germany (3) As of March 07, including Pioneer Austria and Capitalia. (4) After merger with Capitalia, almost ex-aequo with Lombard Finance (5) Cards already activated
  7. 7. Cross border financial companies face a common scenario Different evolution of Wholesale vs Retail (Wholesale with quick globalization, Retail slower but moving forward) European banking market split in two blocks − Private Banks, strongly performance oriented − Cooperative/State owned banks Economies of scale and scope driving cross-border M&A frenzy but complexity and political sensitiveness playing a relevant role Consumer and Corporate needs are in convergence − However regulations and taxations (more than culture) still generating fragmentation 7
  8. 8. Similar trends are hitting all Countries Eurozone banks’ unit margins Continuing population ageing Dependency Ratio (over 65/15-64) 80 70 Japan United States 60 Euro area Customer dis-trust vs banks 50 40 30 20 10 0 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 MIFID directive Consumer protection focus Consumer Lending Mortgage SEPA 8 Banking fees cancellations by regulators Source: Unicredit Research on ECB Data
  9. 9. Similar trends are hitting all Countries 100 Online Banking Users: US (million) 75 78 80 70 65 58 60 Increasing usage of remote I i f t 49 40 31 33 28 channels 20 18 11 0 1999 2001 2003 2005 2007 2009E Average Satisfaction Eu 85 (TRIM Index) 77 66 65 Recent funding cost increase 45 Auto Health Travel nance tailer IT Telco Meida T M Ret Fin 110 Euro area, spread banking issuese (A/A+) Euro Area, spread emissioni bancarie (A+/A) 100 governative, (10 anni) and government i d t issues, 10 years 90 Strong pressure on margins 80 ( g (eg mortgage) g g ) 70 60 50 9 Source: BCG study, 40 2-Jun-07 12-Jul-07 21-Aug-07 30-Sep-07 9-Nov-07 19-Dec-07 28-Jan-08
  10. 10. Unicredit Group has taken a clear route Specialize around customers (Divisional model) across border Cluster governance by strategic focus area Exploit global product factories Build identity across the borders 10
  11. 11. UCG model: focus on custome centric “Divisions” across borders empowered by Global Factories p y § CFO § CRO § STRATEGIC HR Wealth Poland’s Global Banking Retail R t il Corporate CEE Management Markets Services Unicredit Financing Asset Management … Divisional model in place, with focus on customers Commercial Banking run by Division across Italy, Germany and Austria Growth markets (Poland and CEE) locally focused to capture high growth opportunities Global businesses (AM, Unicredit Financing, …) run on a global basis Divisions fully responsible for definition of strategy, targets and execution guidelines strategy Regional Entities contribute to strategy definition, and responsible for execution as well as 11 achievement of targets
  12. 12. UCG Retail built common service models for each customer segment across borders … g Affluent Customers FIRST: best in class advisory model aimed at creating mid-term value Individuals with more 2 customer sub-segments than 100K € I.A.1 Mass Market Si lifi d offer, lif cycle based advisory Simplified ff life l b d d i Individuals with more 7 customer sub-segments than 100K € I.A. Business Class: integrated company- Small Business entreprenour advisory model, remote Companies with less advisory for very small companies than 3Mn € turnover 4 customer sub-segments 12
  13. 13. … thanks to structured exchange of innovations and best p practices generated in different Countries g Initial Structured Best Practice Joint Information Best Practice Replication Initiatives Sharing Sharing •Ad hoc •Local projects •Joint multi- •Best practice workshops based on country database •Document recognized projects •Prioritization of sharing cross-border •Common realignment •Cross Border C oss o de best-practices best p act ces se ce ode s service models •Continuous Co t uous Competence •Teams to definition innovation Center Roles include •Creation of screening and experts from products equal sharing other in all Countries Countries E bl Enabler: common IT platforms, centralized governance l tf t li d 13
  14. 14. Few examples of UGC Retail cross-Country initiatives Unique “Business Class” service model for Small Business all over the Countries Remote advisory model for micro-business Common CRM models integrating best-of-breed innovations of all Countries Cross Border Credit: extension guarantee for daugther companies in foreign Countries where UCG is present Mirrored accounts with instant balances updates between Countries Current accounts benefits package Joint best of breed cross-border IT platform, by integrating best practices present in all Countries – expected beginning 2010 14
  15. 15. The governance is clustered into strategically differentiated areas: the Retail example p Retail Italy Integrate quicly and flawlessly Capitalia network: Become 5,000 branches entity in Italy with more than 20% MS Continue to pursue customer base enlargement Realize integration synergies Complete turnaround and relaunch growth and people motivation: Complete turnaround of unprofitable Mass Market and Small Retail Business segments Germany&Austria Grow with selectivity, become the best bank in serving Affluent segment Keep cost of risk under tight control 15
  16. 16. Global Platforms to Exploit Specialization Excellence: Unicredit Consumer Financing g The Ambition: Tier 1 European player by 2011 bn t k t 20 - 25 b € stock vs current 10 bn (market share of 6 8%) b ( k t h f 6-8%) ~3 bn € revenues, growth pace over 2x market 7 UCG core European markets N N° 3 in PBT in the European CF league table ~ 2 bn € discounted EVA value creation for the Group The St t Th Strategy: consolidate and grow captive lid t d ti business and develop new client acquisition Leverage existing sizeable UCG Retail distribution Develop selectively alternative channels to accelerate new clients acquisition (global partnerships, third party networks, direct channels, in branch corners) Develop world wide best in class Credit Risk organization, processes and tools Dedicated IT unit to speed up expansion Build top notch capabilities: global talents recruiting and dedicated international expamsion teams p 16
  17. 17. Global Platforms to Exploit Specialization Excellence: Pioneer Investments Pioneer data as at the end of December 2006, where not specified Over Euro ~290 bn AUM(1) ~5 bn in alternative London AUM Warsaw Dublin Prague Beijing ~ 300 investment Paris Munich professionals Boston Madrid New York Tel Aviv worldwide Miami Geneva Hong Kong Milan 2,127 employees worldwide (as at Singapore December 31, 2006) Distribution across Buenos Aires Sydney 22 countries worldwide (1) Including Pioneer Austria 17
  18. 18. The glue is a common identity and a culture based on customer service NEW BRAND STATUS Slovak Rep. Bulgaria Czech Rep. Q4/07 Build a recognizable brand in the Ukraine region Croatia BIH Q4/07 Differentiate from competitors Serbia leveraging on extensive network g g g Montenegro strength Romania Hungary Support customer acquisition Baltic area Russia Q4/07 Focus on business sustainability and customer satisfaction Slovenia Q3/07 Poland Final decision to be taken Turkey Germany New brand launched Austria Italy 18
  19. 19. Few challenges exist to complete the path to become a truly European bank p Local regulators prove somehow shy at accepting cross-border governance models, one have to pioneer solutions and strive for acceptance MIFID and other Eu regulations aims in principle to protect customers. But local regulators apply different interpretation and adoption time − Multi-country players have to deal with an un-needed complexity – which customers behaviours differences itself wouldn’t require wouldn t Pressure to reduce / eliminate prices by regulators is often made in f i ti ith t taking into ith th Countries without t ki i t account name of comparison with other C t differences in customer behaviour and sophistication 19