Italy’s biggest lender, Intesa, expands into competitive Abu Dhabi

Mauro Micillo is the head of corporate and investment banking division of Intesa Sanpaolo. Vidhyaa for The National

Banca Intesa Sanpaolo, Italy’s biggest bank by market value, said it is expanding its corporate and investment banking business with branches in Abu Dhabi and Doha to tap growth in key sectors including infrastructure, fashion and transport.

Intesa already has an offshore office in Dubai but the Abu Dhabi branch features a fully operative treasury desk providing services in local currency, including onshore deposits. And that makes it the first Italian bank with an onshore branch in the UAE, a first the lender is betting will give it a competitive edge in what is an overcrowded banking market.

“The opening of our new offices in Abu Dhabi and Doha represents an important step in our international development and growth plan,” said Mauro Micillo, the head of corporate and investment banking division of Intesa Sanpaolo and also the chief executive of Banca IMI, Intesa’s wholly owned specialist investment bank. “Along with our existing regional hub in Dubai, our new offices underline our growth presence and long-term commitment to the Gulf. The region is strategically important to Intesa Sanpaolo as we look to assist our Italian clients with their own international expansion plans.”

Mr Micillo said the region is also home to a number of important industry sectors and large projects for which Intesa has considerable expertise and experience including oil and gas, infrastructure and transport and fashion and luxury.

Intesa isn't the only Italian lender heading to Abu Dhabi. UniCredit, Intesa's closest competitor in Italy, will open a branch in Abu Dhabi's new financial district by the summer, Jean Mustier, the lender's chief executive, told The National in February.

UniCredit plans to provide financial services to businesses in the Middle East and Europe from its base in Abu Dhabi Global Market, the offshore financial centre on Al Maryah Island.

The push by Italian banks to diversify their sources of revenue comes amid a litany of woes for the Italian banking industry as a whole. Italian lenders have been weighed down by rising bad debt – as high as €360 billion (Dh1.4 trillion) – and several have been working to clean up their books. ​

In the UAE, Intesa and UniCredit will be wading into a competitive arena where 49 commercial banks are vying for business at a time when these banks have not been having the best of times. Deposits have dwindled as government-related entities have withdrawn funds to plug growing budget deficits.

While the oil drop, which has been reversing since November, led to an increase in borrowing by governments to reduce those deficits, it has softened demand for loans among local corporations and increased the level of debt defaults. Among the hardest hit have been small- and medium-sized businesses.

Follow The National's Business section on Twitter