Banca IMI goes global

When Nicola Baiocchi Di Silvestri and Nicola Giaretta jumped ship earlier this year from Barclays Capital to Banca IMI in Milan, the investment banking arm of Intesa Sanpaolo, they were given a mandate to grow the bank's international business in corporate foreign exchange, interest rates and commodities.

While Banca IMI might not yet be a household name in the international FX market, Baiocchi and Giaretta have worked together since 1997 at two major FX banks in Milan, giving them the requisite experience to grow the business. At Barclays Capital, they were responsible for FX and interest rates sales to Italian large and mid-cap corporates and public authorities, and before that they were at Citi, focusing on FX sales to Italian corporates and financial institutions.

In their new roles at Banca IMI, Baiocchi is head of corporate and public sector sales, reporting to Federico Schlesinger, global head of institutional and corporate sales, and Giaretta is head of corporate risk solutions, reporting to Baiocchi. One of their main priorities in their first few months has been to recruit an international sales force that will enable them to fulfil their challenging mandate, in line with Intesa Sanpaolo's group strategy to internationalise the business over the coming years.

"The corporate risk management team we manage offers financial risk solutions across FX, rates, equities and commodities to Intesa Sanpaolo's corporate clients, both Italian and international. Our main task since joining has been to leverage our strong corporate sales team at an international level. We are now working to develop the international client base, which means not only international branches of Italian companies, but also multinationals in Europe, Asia, and North and South America," says Baiocchi.

While the bank's trading desks are based in Milan, Banca IMI also has hubs in London, New York and Dubai, as well as representative offices in Chile and Brazil. "Emerging markets are interesting for us. We offer non-deliverable forwards and options in most currency pairs and we are able to provide cross-asset hybrid solutions involving FX, rates, equities and commodities," says Giaretta.

The platform is a first in the market and it is requiring a significant investment. It is a must-have if you want to compete on the international stage. We are a second-tier global investment bank and this is a service we want to offer to our clients despite the cost

In Italy, Banca IMI is among the leaders in the local foreign exchange market, serving roughly 2,000 corporate clients, mostly with an annual turnover above €150 million. While the bank's international footprint is not currently comparable, that is something Baiocchi hopes will soon change as it sets up international sales desks. London and New York have been the focus of his attention initially.

"Intesa Sanpaolo has already established commercial banking relationships with 200 clients in New York and this has allowed us to budget for a local sales force based in the US under IMI Securities," says Baiocchi.

In London, Giaretta and Baiocchi are looking to recruit four salespeople by the end of the year to cover continental Europe, while in Italy, the sales team is composed of 30 people and has remained unchanged since the pair joined earlier in the year.

"In Italy we have implemented a clear division between asset classes, but internationally we will have a multi-product sales force. We want to originate ancillary businesses to our lending activities to support the bank's profitability amid the cost of funding crisis we are going through," says Giaretta.

"One of the biggest changes we are seeing in the market is that a few years ago banks used to go to clients to sell their products," Baiocchi adds. "This is still partially working with institutional clients that by nature invest in products. But a corporate client is more concerned about managing the financial risks embedded in their core business. That's why we must focus on offering risk management solutions rather than product brochures."

According to Baiocchi, Banca IMI works with all the major Italian conglomerates, but small- and mid-sized corporates account for an increasingly important share of its daily trading volumes. He adds that Italian clients are almost unique in their widespread need for a close personal relationship with their trading counterparty.

"We are a corporate bank and our strength resides in the number of strong relationships we have established with our clients. Our focus is on the client, and all the Banca IMI product specialists are working together with the Intesa Sanpaolo relationship managers to deliver the best solutions according to our customers' needs. The global relationship manager makes sure the bank delivers solutions in a co-ordinated way – they come to meetings as well, adding value to the relationships," says Baiocchi.

The smaller the client, the more important that relationship becomes, Giaretta adds. "This creates a barrier to entry for an international player that typically cannot support a client on the lending side. You cannot step into the market only with FX; you need first to become a relationship bank. Mid-cap clients do not trade as frequently as big corporates and this means the Italian market is behind in terms of FX electronic execution – few Italian banks rely on a trading platform."

Banca IMI provides liquidity to FXall, but it also plans to launch a proprietary platform by the end of 2011, which will help to expand the bank's footprint globally. The platform, which has been under development for more than a year, is expected to develop over time and allow for the addition of new programmes after launch.

"The platform is a first in the market and it is requiring a significant investment. It is a must-have if you want to compete on the international stage. Just as fashion houses such as Gucci and Louis Vuitton need to have a presence on the most exclusive shopping streets despite the cost, we need to have such a window, as this is where our clients are doing their shopping. Platforms only become profitable on volumes – we are a second-tier global investment bank and this is a service we want to offer to our clients despite the cost," says Giaretta.