Sanpaolo sees little threat from foreign entrants

By Lisa Jucca

GENEVA (Reuters) - Sanpaolo IMI SPI.MI sees little threat to its private and personal banking business from foreign banks entering the Italian market, even though they may introduce new products and services, a senior banker said.

French bank BNP Paribas (BNPP.PA: Quote, Profile, Research, Stock Buzz) told Reuters this week it would reshape its Italian private banking business after it bought local lender Banca Nazionale del Lavoro.

Citigroup (C.N: Quote, Profile, Research, Stock Buzz) singled out Italy among the countries the U.S. bank is targeting for private banking growth.

Dutch bank ABN AMRO AAH.AS has purchased mid-size Italian bank Antonveneta, which it is still in the process of integrating.

"I am not really concerned by these entrants," Luca Giordano, head of Sanpaolo personal banking division, which handles clients with holdings between 100,000 euros ($127,100) and 1 million.

"They add to the professionalism of the process," he told the Reuters Wealth Management Summit.

The high margins in Italian banking are attracting foreign players, which re expected to introduce more sophisticated products than those now available.

But as Sanpaolo moves to integrate with Banca Intesa BIN.MI to form an $80 billion player, it expects to have sufficient power to withstand potential threats.

"After the merger with Intesa, Sanpaolo will have the size and muscles to manufacture any kind of product," Giordano said.

PRESSURE AT THE LOWER END

While the jury is still out on whether new competitors such as BNP Paribas and ABN AMRO can really make a difference for Italian clients, local banks are facing tough competition from online outsiders such as ING (ING.AS: Quote, Profile, Research, Stock Buzz) and more recently Santander Consumer Bank (SAN.MC: Quote, Profile, Research, Stock Buzz).

Dutch bank ING has been able to capture Italian clients with its online high-yield ING Direct savings account, which even wealthy individuals have been using to temporarily stash their excess cash, private bankers told Reuters.

"ING has had a big impact. They have entered the market with a very new product. It's a different model from what other banks can offer," said Giordano.

"Certainly we feel pressure. We face a situation where customers compare us with ING Direct. But our answer was not to raise our rates in an undifferentiated way."