Mediobanca Wants to Remain ‘Exclusive Club’ Amid M&A Spree

(Bloomberg) -- Mediobanca SpA Chief Executive Officer Alberto Nagel is seeking to resist the upcoming wave of mergers and acquisitions in European banking by keeping the investment bank independent and expanding in more lucrative segments.

The CEO, who has run Mediobanca since 2008, has turned the Milan-based bank into a boutique financial institution with ambitious plans for growth in wealth and alternative asset management. Still, he is not looking for a major combination with a commercial lender.

“We are an exclusive members-only club and we’d like to keep it like that,” Nagel, 55, said in an interview.

After Intesa Sanpaolo SpA bought smaller rival UBI Banca SpA, the Italian banking industry has been in the midst of an M&A spree. While UniCredit SpA is pondering a takeover of Banca Monte dei Paschi di Siena SpA, Mediobanca wants to gain more wealthy clients.

The lender, which was set up after the Second World War to fund Italy’s reconstruction, is seeking acquisitions “in wealth and alternative asset management as well as in consumer business,” Nagel said. Those niches could thrive even amid record-low interest rates and a sluggish domestic economy.

Scouting for Deals

“We can do large M&A in Italy’s wealth management distribution to speed up growth, the main issue is the availability of assets,” said Nagel at a virtual round-table forum with Bloomberg News.

Italian players such as Banca Mediolanum SpA, Banca Generali SpA and Fineco Bank SpA could be good fits for Mediobanca’s strategy, but they are not up for sale. “We are monitoring each of them, but there are no live talks,” Nagel said, adding that the lender is choosing a friendly approach for any possible transaction.

Mediobanca, which has said it is ready to sell part of its 10% stake in Assicurazioni Generali SpA to fund large transformational deals, abandoned plans to buy Banca Generali earlier this year as the insurer decided not to sell its banking and wealth management unit, people familiar with the matter said at the time.

“We have very good relations with Generali, but the timing didn’t work,” Nagel said. “We realized it was an industrially strong combination but it lacked compelling financial terms for both” Mediobanca and the insurer.

Mediobanca is focusing on smaller deals as it waits for opportunities to eventually pull off a big transaction. In Italy it may buy consumer or wealth businesses of foreign banks that could leave the country, as it did in 2015 when the bank absorbed Barclays Plc’s consumer-banking operations in Italy. Mediobanca is also interested in expanding in credit alternative asset managements, the CEO said.

Mediobanca, founded in 1946, sat at the center of Italian capitalism for decades by using a web of holdings in the country’s biggest companies to attract clients. Nagel, who joined the lender in 1991, has refocused it on banking, developing consumer business, strengthening market divisions and boosting the asset management business. He also led the bank through expansion abroad.

New Investors

Nagel’s challenge for the next three year is to convince investors that his expansion plan will be successful.

Luxottica founder Leonardo Del Vecchio has been the bank‘s biggest single investor since last year. The billionaire, who now owns an 11% stake, has criticized the bank’s management for being too passive in seeking growth opportunities and for being overly dependent on returns from the Generali stake. Nagel reiterated in the interview he has regular conversations with Del Vecchio.

Even in the absence of external growth, Mediobanca plans to increase its distribution capacity in wealth management by 50% through 2023, by hiring financial advisers, private and investment bankers, Nagel said. “This will lead to high single-digit or double-digit growth in revenue in wealth management.”

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