Best bank: UniCredit
Market doubts, three years ago, about whether Andrea Orcel’s management of UniCredit would be sufficiently orientated to shareholder value have proven to be far from the mark. Orcel might have shied away from a deal with the Italian government to buy Banca Monte dei Paschi di Siena in 2021, but this has not prevented UniCredit from remaining a large and growing part of the European banking story.
In 2023, UniCredit’s share price increased by 75%, compared to a 25% rise in the share price of its arch-rival, Intesa Sanpaolo. In 2024, that divergence in UniCredit’s favour has continued. By mid-2024, UniCredit’s share price had tripled in just two years, breaking the all-important mark of one times book value.
Much larger capital returns, including share buybacks, are a key reason for this share price boost. At the same time, Orcel has held back from distributing the large amount of excess capital inherited from his predecessor Jean Pierre Mustier. In fact, the bank’s common equity tier-1 (CET1) ratio at end of 2023 was 15.89%, 97 basis points higher than a year earlier. That compares to a target CET1 ratio of just 13%, leaving the bank a large amount of funds to either propel shareholder value via extraordinary returns or by turbocharging growth through acquisition.
What Orcel describes as a more efficient deployment of capital is among the reasons the bank is able to boost capital at the same time as having a generous payout policy. UniCredit has shifted its use of balance sheet towards risk-adjusted returns, which is also boosting profitability, notably in its corporate business in Italy. Group-wide, its return on tangible equity was 16.6% last year, compared with 7.3% when Orcel arrived in 2021, on a slightly lower capital ratio.
In a recent interview with Euromoney, Orcel – who is Euromoney’s banker of the year this year – laid out how UniCredit has cut €1.2 billion of costs in the past three years. And yet, he pointed out, the bank has reinvested most of this in front-line staff, technology and product factories, as it is also targeting growth, especially of fees, which was previously less of a strong point at UniCredit.
In Italy, the new push on fees has included developing a new product partnership with asset management firm Azimut, for example. It has also rationalized its insurance partnerships and laid out plans to buy out its joint venture with CNP Assurances next year, accounting for most of the life insurance products it distributes in Italy. Growth of its payments business is also among its targets, including through a new pan-European cards partnership with Mastercard.
Best investment bank: Intesa Sanpaolo, IMI Corporate & Investment Banking Division
IMI Corporate & Investment Banking, a division of Intesa Sanpaolo, has broken out of Italy in terms of the share of client revenues coming from international markets. However, the firm is not neglecting its position in its home market, where the IMI brand retains a high degree of local investment banking prestige, dating back to its role in financing Italy’s reconstruction after the Second World War.
In the view of the bank itself and many of its local peers, stability is one of its best attributes. It has not experienced the same sort of international retreat and mass layoffs seen in other European investment banks, in large part because its focus on efficiency is longstanding, IMI chief executive Mauro Micillo recently emphasized to Euromoney. While IMI is consistently generating around €4 billion of annual revenues, its cost-to-income ratio has remained low, averaging around 30% over the past five years.
It is naturally strongest in debt capital markets, where its 2023 deals included an €18.2 billion issue in the first of a new programme of retail-orientated government bonds, a sustainability-linked bond for Enel and a senior non-preferred bond for mid-tier bank BPER.
In M&A, meanwhile, its deals included advising Mayhoola on a 30% disposal in Valentino to Kering for €1.7 billion, Autogrill on its strategic business combination with Dufry, Pinalli on the disposal of a majority stake to H.I.G. Capital, and NB Renaissance Partners on the acquisition of U-Power Group and a joint controlling stake in Neopharmed Gentili.
It was also global coordinator in financings for the acquisitions of Giovanni Bozzetto by Aimia and of a controlling stake in Prima Industrie Group by Alpha Private Equity and Permira. And in the equity capital markets, IMI was global coordinator in the €432 million IPO of Euro Group Laminations, financial adviser on the IPO of Sicily by Car on Euronext Growth Milan and global coordinator in a €500 million convertible bond issued by Saipem in August.
Best international investment bank: Citi
Citi worked on several key M&A transactions in Italy last year. It acted as a financial adviser and financier to KKR for its purchase of TIM’s fixed network assets. The deal, signed in November 2023, involved TIM transferring its main network operations into FiberCop, set to be renamed TIM NetCo.
Citi also acted as the exclusive financial adviser to EQT Infrastructure for the acquisition of a 60% stake in NetCo from WindTre. The deal, signed in May 2023, positions NetCo as Italy’s principal mobile and fixed network infrastructure provider and marks it as Europe’s first independent access network operator primarily focusing on mobile services.
Best digital bank: illimity
Italian neobank illimity has expanded its digital services with improvements to its retail and small and medium-sized enterprise banking channels.
Its digital SME lending platform b-ilty introduced b-star, a tool assisting startups and new businesses with company formation through collaborations with third-party experts. It also broadened its services to include transaction banking for freelancers and sole traders.
illimity also launched Motore Italia, a series of national meetings designed to engage directly with entrepreneurs. This, coupled with a series of webinars held to demonstrate the bank’s new services, helped to expand its reach.
illimitybank.com, the bank’s digital banking service for retail customers, rolled out a premium current account product that offers a 2.5% yield. This launch was part of a broader strategy to attract new deposits with rates of up to 4.75%.
Best bank for SMEs: UniCredit
UniCredit dominates the small and medium-sized enterprise segment in Italy. It has lent €1 billion through its minibond instrument to Italian SMEs and continues to support businesses in need of liquidity through its flagship UniCredit per l’Italia programme.
The latest iteration of this initiative targets SMEs struggling with the effects of inflation and has allocated substantial funds for sector-specific and regional development. Measures include flexible financing and €4 billion for household spending and investments, alongside €6 billion for boosting tourism, made in Italy products and special economic zones.
The bank has also introduced an environmental, social and governance-linked loan for SMEs with revenues of more than €2 million. The bank has already disbursed loans to Piazza Italia in Naples, Silga in Rome and Gruppo Bioimpianti in Milan worth total of around €20 million. This product, with a term of up to 10 years, incentivises businesses to pursue social improvement objectives relating to employee welfare and community support.
Best bank for ESG: UniCredit
UniCredit inked approximately €19 billion in environmental lending last year, with €7.2 billion of that taking place in Italy. The bank issued several sustainable bonds in the country, including green senior preferred bonds worth €1.75 billion and a social retail senior preferred bond worth €200 million.
The lender has committed to further embedding environmental, social and governance principles in its internal structure. It has established clear key performance indicators, including net-zero targets, for its first three priority sectors, and it became the first Italian bank to join the Finance for Biodiversity Pledge, actively contributing to the production of guides and papers for the financial sector.
In a move to boost internal expertise, UniCredit has launched an online course on sustainable finance that attracted over 1,300 participants from its Italian corporate division.
The bank’s mobility initiatives included providing bike storage and electric bike charging stations across Italy and facilitating over 15,000 kilometres of shared travel via a carpooling app.
Best bank for corporates: Intesa Sanpaolo, IMI Corporate & Investment Banking Division
IMI Corporate & Investment Banking has made significant investment in digitizing its corporate banking operations. Digital services for corporates, especially document exchange, grew by 21.5% last year. The automation of export letters of credit discounting now includes real-time auditing and transaction information.
The bank’s business banking platform, Inbiz, also saw significant growth. New main contract activations increased by 10.4%, to 10,544 in 2023, and total activations, including subsidiary contracts, rose by 5.3%. Additionally, there was a 14.1% reduction in main platform closures, down from 18,735 in 2022 to 16,088 in 2023.
