Banca Fideuram SpA

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Banca Fideuram SpA

Piazzale Giulio Douhet 31
Roma
I-00143
Italy
Telephone: +39 06 59021
Fax: +39 06 59022634
Web site: http://www.fideuram.it

Public Company
Incorporated: 1968 as Fideuram
Employees: 1,995
Total Assets: $5.48 billion (2001)
Stock Exchanges: Borsa Italiana
Ticker Symbol: FIBK.MI
NAIC: 522110 Commercial Banking

Banca Fideuram SpA is Italy's leading assets management and investment banking group, with more than EUR 58 billion in assets under its control. Italian financial powerhouse San Paolo IMI, the country's largest commercial bank, controls nearly 74 percent of Banca Fideuram. Nonetheless, Banca Fideuram has long maintained operations independent of its parent company. Most of Banca Fideuram's business is focused on its core assets management services, which account for more than 80 percent of the group's total net revenues. The remainder is generated, in large part, through a range of retail banking services. Although Italy continues to account for the large majority of Fideuram's business, at 85 percent of its revenues, the company has been making a push into the broader European market since the late 1990s. The company has set up subsidiaries in Switzerland and Luxembourg. In 2000, Fideuram moved into France through the acquisition of that country's Wargny Associes, since renamed Fideuram Wargny, giving the company a strong brokerage arm. In Italy, Fideuram also acquired Sanpaolo Invest Network from San Paolo IMI in 2002. Fideuram has been active in the insurance business as well, particularly through its 76 percent holding of Fideuram Vita. In 2004, however, Banca Fideuram agreed to de-merge Fideuram Vita as a separate company directly under San Paolo's control. Banca Fideuram is listed on the Borsa Italiana and is part of the exchange's MIB30 index of top Italian companies.

Mutual Fund Provider in the 1970s

Banca Fideuram developed as an offshoot of Italy's Instituto Mobiliare Italiano, or IMI, created in 1931 out of the chaos of Italy's post-World War I economy. Founded in large part to aid in the reconstruction of Italy's ruined business sector, IMI operations became more focused in the middle of the decade with the Banking Law of 1936. Under this legislation, which remained in place into the 1990s, IMI targeted the medium- and long-term loan market, providing funding for businesses as well as for public works projects. Over the next several decades, the bank developed a range of commercial banking services.

In the years following World War II and with the rising economy of the postwar reconstruction period, IMI developed a strong business in investment banking, asset management, and other private banking services. The decision of International Overseas Services in the late 1960s to withdraw from the operation of mutual fund investments opened a new opportunity for IMI. In 1968, IMI created a new subsidiary, Fideuram, which began offering the Luxembourg-based Fonditalia and Interfund mutual fund products to the Italian market.

The new company was backed by a team of more than 300 private bankers, who began promoting its products throughout the country. Into the next decade, Fideuram remained limited to promoting foreign fund investments. With the passage of new legislation in 1983, however, the bank gained access to the first mutual funds offered within Italy itself. In 1984, Fideuram began marketing Italy's first domestic funds, Imirend and Imicapital, backed by parent IMI.

Fideuram represented just one part of IMI's mutual funds and assets management operations, which by the late 1980s had grown into one of Italy's largest. Another important part of IMI's assets management business was Banca Manusardi, which functioned as IMI's inhouse bank, providing back-office processing for its mutual funds business.

At the beginning of the 1990s, IMI began making moves to streamline these operations ahead of the coming European economic unification, which, accompanied by new legislation and deregulation of the banking industry, promised a new era of banking competition in Italy. In 1987, the bank took Banca Manusardi public, with a listing on the Borsa Italiana. Next, IMI began preparing to merge its assets management businesses into the newly public company, a process that resulted, in 1992, in the merger between Banca Manusardi and Fideuram. The new company was then named Banca Fideuram with its shares listed on the Borsa Italiana.

International Assets Management Giant in the 21st Century

Banca Fideuram started out as a giant in Italy's investment banking sector, with 22 Fideuram bank branches and a nationally operating army of more than 2,200 sales agents working from 220 sales offices. The new Banca Fideuram also included insurance products, notably through subsidiaries Fideuram Vita (held at more than 76 percent by Fideuram) and Fideuram Assicurazioni, which was 99 percent owned by the bank. Mutual funds remained the company's primary focus, however, and, with control of such mutual fund products as Fideuram Gestioni and part-ownership of Imigest, another top Italian mutual fund, Fideuram was the clear market leader. By the early 1990s, Banca Fideuram controlled more than 21 percent of the total mutual fund market.

Fideuram grew strongly into the middle of the 1990s. By 1996, the company was valued among the top Italian public companies, and its listing was added to the prestigious MIB 30 index. By then, Fideuram had begun to diversify its product offering. Among the company's new products was a new "Umbrella Fund" launched in 1995 and modeled after the British-styled multilevel funds. In 1997, the company branched out into personalized financial planning and other private banking services through a partnership with the United States' Frank Russell group.

The late 1990s and early 2000s marked a new phase in Fideuram's growth as the company turned toward developing an international base of operations. In 1998, the bank established its first foreign subsidiary, in Luxembourg. This was followed in 2001 by the creation of a Swiss subsidiary, in the town of Lugano. By then, Fideuram had moved into the French market as well, when it acquired Groupe Wargny in 2000.

Wargny had been established in 1806 as the company Charge d'Argent de Change Warngy. Specialized in asset management and with a particular focus on brokerage services, Wargny had developed a strong business in providing back-office services to institutional investors by the 1970s. After going public in 1982, Wargny had pioneered telephone-based financial transactions in France, with the launch of Telebourse in 1985.

The 1990s had marked a period of expansion for Wargny, which created a new subsidiary, Financiere Wargny, devoted to providing assets management and consulting services to the corporate sector. Wargny also began a period of acquisitions in the early 1990s, starting with its purchase of Societe de Bourse FIP in 1994. The company completed several more acquisitions through the 1990s, including Societe de Bourse Fauchier-Magnan in 1995, and Temps Reel Intermediation in 1996.

Wargny's expansion also included the opening of new offices in Lyon in 1994 and in Monaco in 1995. The company moved into new virtual quarters with the launch of its Internetbased e-broker site, Wargny.com, in 1999. That year, the company developed a new assets management operation, Wargny Gestion, backed by the purchase of Cap Finance.

Company Perspectives:

Mission: Banca Fideuram brings private investors highlysophisticated portfolio management services that were previously available to institutional investors only.

Key Dates:

1931:: IMI, which specializes in medium- and long-term loans, as well as assets management services, is created in Italy.
1968:: IMI creates a new subsidiary, Fideuram, to market Luxembourg-based mutual fund products.
1984:: Fideuram launches the first Italy-based mutual fund.
1987:: IMI lists the back-office subsidiary Banca Manusardi on the Borsa Italiana.
1992:: IMI merges Manusardi and Fideuram and creates Banca Fideuram, which is listed on the Borsa Italiana.
1995:: The "Umbrella Fund" is launched, in a first attempt at diversification.
1996:: Fideuram is listed on the Borsa Italiana's MIB 30 index.
1997:: Fideuram diversifies into private banking operations.
1998:: The first foreign subsidiary is established in Luxembourg.
2000:: Groupe Wargny, in France, is acquired, adding its brokerage services.
2001:: A subsidiary is launched in Switzerland.
2002:: Banca Sanpaolo Invest is acquired from parent San Paolo IMI.
2004:: Fideuram agrees to de-merge the Fideuram Vita life insurance subsidiary to parent San Paolo IMI.

Under Banca Fideuram, however, Wargny found a strong financial partner for its continued growth. In 2001, Fideuram consolidated its French presence, regrouping its operations in that country under a new subsidiary, Banque Privee Fideuram Wargny. Fideuram, in the meantime, had seen its own parent company grow strongly at the beginning of the century, through the merger of IMI with another leading Italian bank, San Paolo, creating San Paolo IMI. The subsequent merger of that bank with Banco di Napoli created one of Italy's largest publicly listed commercial banking empires.

The growth of Fideuram's international operations—which, by 2003, represented 15 percent of the bank's total net revenues—enabled Fideuram to sharpen its focus around a core of assets management and private banking services. In 2002, the group's operations were boosted through an agreement to acquire San Paolo IMI's own financial services and investment consulting arm, Banca Sanpaolo Invest. The addition of the new operation, with its own strong brand and more than 1,500 financial consultants, boosted the total assets under Fideuram's control from slightly less than EUR 50 million to more than EUR 59.6 million, placing Fideuram among the top assets management groups not only in Italy but throughout Europe.

With its newly fortified focus as a provider of financial services, assets management, and private banking, Fideuram moved to simplify its own structure at the beginning of 2004. In February of that year, Fideuram and San Paolo IMI announced their intention to de-merge Fideuram Vita from Fideuram, transferring ownership of the insurance operation to San Paolo IMI. That transaction awaited approval by Italian banking authorities.

In the meantime, Fideuram became embroiled in the controversy surrounding a law voted in by the Berlusconi-led government, which granted a tax amnesty on savings invested outside of Italy. In March 2004, a number of Fideuram sales agents in Italy and in Switzerland were accused of laundering clients' money, making it appear as if assets originated outside of Italy, in order to claim the tax amnesty. Fideuram agreed to cooperate with authorities, while asserting the company acted within the letter of the contested legislation.