Co-General Manager and Chief Financial Officer, Banco BPM
Mercati Che Fare - Edoardo Ginevra e la rivoluzione bancaria di BPM
πΊ In questa nuova puntata speciale del format dedicato ai mercati finanziari di ππππ ππππππ ππππππ, a cura del direttore Leopoldo Gasbarro, si parlerΓ della rivoluzione in atto nel settore bancario, con:
π€Edoardo Ginevra, Condirettore Generale CFO di Banco BPM
π Per approfondire visita: https://www.wallstreetitalia.com
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Transcript (17 segments)
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Host0:21
Good morning and welcome to everyone. Appointment with Banco BPM and in particular with the CFO Edoardo Ginevra, who I immediately welcome to the studio. Good morning, Ginevra, welcome back.
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Edoardo Ginevra0:34
Good morning, good morning.
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Host0:37
Listen, I start from a very personal consideration in this conversation I'll have with you today, which is that I have recently met many of your clients - entrepreneurs, normal retail customers, everyday citizens, let's define them like that - and I have never heard a bad word about you. In this time when banks are often a scapegoat for what happens, what are you doing to get this positive feedback from your clientele?
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Edoardo Ginevra1:10
First of all, thank you, because as you say, it's not so easy for a sector like ours to build a story of reputation, appreciation, acceptance and mutual respect with clients. But things always work out when the recipe is simplified. In our case, the bank has the ability to equip itself to be as close as possible to the needs of clients. Let's remember that we have assets of around 200 billion, but we are obviously smaller than the two large groups. We are fortunate to have significant size and critical mass in particularly dynamic and effervescent areas of the country in terms of economic activity. That fortune is also the key ingredient of the recipe I mentioned. For us, it is fundamental to understand and interpret the needs of key clients in these areas where we are strongest: northern Italy, Veneto, Lombardy, Piedmont, Emilia Romagna, not forgetting the others but starting from our main territory. And to work to satisfy these needs with a model, a short supply chain that can easily reach the client, provide fast responses, involving those who are authorized to make decisions in a lean model that is not burdened by bureaucracy.
Our clients are used to having a direct dialogue with the top management of the bank, with those who have direct responsibility for credit activities and product structuring. If we were to make a claim of the structure and business model, we could say 'enterprise, enterprise, enterprise'. Well, I would say enterprise and clients, because we start from enterprises but we connect all that world that revolves around the production system, reaching clients and people - enterprises and people, let's put it that way. Moreover, the entrepreneur also represents the final client as a person, because many of the data, looking especially at the money that is in this country in current accounts, there is a lot of corporate liquidity and then the savings of many entrepreneurs on the non-corporate side. It's also a model that allows you to work on the synergies among all this world that revolves around the enterprise. It is not easy to present a bare operation based solely on its profitability. A financing operation, a structured operation often ties up a lot of capital, and by tying up a lot of capital it requires high profitability to be able to generate value. So to generate value you must be able to attach to the individual operations a 360-degree relationship.
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Host5:33
Ginevra, banking is a model that is evolving so much - we've been talking about it for years - and then maybe I'd like to know your idea. The idea you've formed in its development. There are works in progress also around your building, from what we hear in the background, so it's evident that things evolve along the way. But tell us a bit: how do you do banking today, respecting clients and entrepreneurs in the way you were highlighting a moment ago, and also respecting a whole series of constraints, regulations, contexts that are really complicated, with everything that has entered the banking world post-Lehman? Compliance has become even more complicated than any other structure in your sector.
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Edoardo Ginevra6:37
Well, if I may express a concept a bit like a little professor: doing business in banks is learning to do constrained optimization - the problems of mathematics. That would be a newspaper headline, albeit a bit specialized. It means essentially: optimization - what is it? It's profitability and value creation for shareholders, or if you like for all stakeholders - constrained, because in a business like ours based on trust and the ability to maintain a fiduciary relationship with depositors, it is normal that there is regulation that rewards as much as possible those who are able to maintain this trust and safeguards the solidity from a capital perspective, safeguards against taking overly risky decisions. In such a framework, the sector has been subject to a long wave of regulations that has been particularly intense since the Lehman crisis, since 2008, and especially in Europe has led to several upheavals. Lehman crisis in 2008, sovereign debt crisis triggered by Greece, strongly felt in Italy a few years later, which then led to a series of decisions at European level with the unification of banking supervision under the Single Supervisory Mechanism in Frankfurt. In these 16 years, we haven't stopped for a moment. Today maybe we are in sight of a greater stabilization - while I say this I don't believe it myself, because who knows what awaits us around the corner. Who knows what could happen, because things happen. We need to find white swans instead of black swans, to paraphrase a text by Taleb, where he says that every now and then the black swan arrives among the white swans. Let's hope not. But there have been many changes, many interventions on legislation and secondary regulation, many interventions on supervision. Today the ECB or the Single Supervisory Mechanism has achieved very important objectives that once seemed like chimeras in terms of reducing the weight of non-performing loans and generally reducing bank risks to much more manageable levels. There are many threats to the sector highlighted by the supervisor, but I remember when we merged Banco BPM, we were at 24% NPLs, Italy was at 16%. Today we are between 2 and 3%.
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Host10:57
The crisis of higher interest rates and inflation - if not you, in some way will lead to an increase in these numbers from 2 to 4 to 5%. But even if that happens, it's an increase in default rates. Speaking of new numbers, unfortunately having to go analytical, we come from 4 consecutive years of the Italian banking system with default rates at 1%. 1% is manageable, it means you don't need a huge pump to empty the tank that fills up, you just need to open a relief valve a little. What we can expect is that this 1% this year, next year, could increase variably from 1.2 to 1.4, 1.5, the most pessimistic say 1.6. So what does that mean? It's still a contained number. Let's take a leap into the future, go forward a few years, let's close this decade - end of 2030 or beginning 2030, let's say March 2030 - how would you read or how do you think you will read the banking world in our country? Because then we talked about increasing constraints on our optimizations, because there will be new ones. What until yesterday was reducible to a simplified scheme of maximizing profitability under capital constraints, tomorrow will require introducing into the equation also environmental objectives and climate transition. So the acronym is ESG, perhaps the first point that will condition and will be important to manage in introducing into our daily management the environmental part, where it will be important to evolve bank portfolios towards a correct footprint in a medium-long term perspective. Let's not forget that the future will also depend on the planet's ability to regenerate and perpetuate itself.
Financial intermediaries, in your opinion, is it right to give the enormous responsibility that is assigned to your world in this sector? You are almost undisputed protagonists from many points of view because through you pass the money, financing, businesses, projects. So I don't know, tell me.
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Edoardo Ginevra12:53
No, it is right to adopt a balanced approach, and as your question rightly indicates, also transversal to all sectors. Because it's a bit like relying solely on the indirect effects of financing from intermediaries in a market where non-bank intermediation is growing and is worth hundreds of billions, and the primary responsibility for emissions is a third party that can then find other channels to finance itself. So it's not sufficient, therefore it's important to adopt a balanced approach.
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Host13:45
You are a numbers man, and I can only ask questions with numbers. We saw last week the placement of the third tranche of the BTP Valore, 18 billion, which paired with the other two tranches. I won't go into the quality of the security, that's not my role, but I'll go into the message that Italians receive: probably Italian savers want simple messages - how much does it yield, for how long, and so on. The strong response, 60 billion in three editions, gives us this indication.
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Edoardo Ginevra14:33
Well, it's a response that serves the government to convert, reallocate, rebalance the allocation of government bond holdings to families, who by nature have greater stability in investment. We banks have assisted, promoted, and accompanied this placement with great satisfaction. It is an important vehicle of financial investment to improve the allocation of household savings and generally contribute to a more orderly financing of the economy and public finances. We know that the economy's contribution to financing public finances... But let's return to a few more concrete numbers, because in your organization it's important to keep under control how many things you have to pay attention to, you who are responsible for such a large institution that is responsible for so many savings, so many life stories before money.
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Host15:48
Ginevra, but perhaps counting them, you soon get to numbers that would seem unmanageable. In the end, you have to put them in order of priority, starting from the fact that we are here to serve the client's financial needs - savings, financing, and payment. So we start from there and articulate them in a detailed way with respect to the different types of clients, which in marketing is called segmentation, and from there we understand how they can evolve. How do you see yourself in the coming years to close? Because I like your approach to topics, there is a vein of irony in your words at times linked to the many difficulties, a very strong analytical vein in your considerations. But what is your sentiment regarding this world?
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Edoardo Ginevra16:51
Well, I started dealing with banks, I work in this sector since I began my professional career. So I intend to continue following it and, if possible, with an interesting role. Always with an orange tie, something that helps give a bit of color to the day. Absolutely pleasant.
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Host17:24
What you tell us, because the underlying of all your speech has always been the same as when we started - the attention to people, attention to the client. There can be many elements of discussion, many numbers, but it seems to me that everything you told us always keeps this very present, and you said it several times in your reasoning. Well received. I highlighted at length in this conversation the priorities we must give in serving the client, serving their needs. Correct. The theme of attention to people: we are a group of 20,000 colleagues. Each of the 20,000 is part of a project, and perhaps our commitment, another strong commitment for the future, must be to make them feel part of this project, to make all colleagues perceive that with their daily work they help run the bank and develop the business. Well, perhaps with this answer you gave me another element of analysis compared to what you told me at the beginning about the feeling of well-being I perceived in many of your clients. So I compliment you, I compliment the whole structure, because knowing many of you, I also form my idea of what I see. Thank you for accompanying us in this conversation, because thanks to you we always get very interesting insights on the banking world, which is the world that holds up the system. Without banks, the economic system as we know it, but also the life system, would be very different. We would go back to barter, to that famous scene of Benigni and Massimo Troisi with a florin every time they crossed a border, no longer national or international but even a county. I thank you for being with us, I hope to meet you soon because it's always pleasant to chat with you. Thank you very much.
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Edoardo Ginevra19:36
My pleasure. Have a good day.
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Host19:40
Good day to everyone. The appointment with 'Markets That Matter' returns in a few weeks. Goodbye everyone.