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Intesa Sanpaolo - Banca Prossima

Added on 22-03-2013

Company

Intesa Sanpaolo

Year

2007

Business challenge

250,000 non-profit organisations operate in Italy, mainly supplying welfare services to families. Due to the constraints on public spending and the decrease of family-based support, the difficulties and the demand for these services are increasing.  Most of these organisations, however, are unable to meet this demand as they are credit-constrained, mostly due to their status as non-profit organisations rather than businesses (with which the traditional retail banks are used to deal efficiently and effectively).

How can credit be extended to these non-profits to help non-profits better deliver welfare services?

Description

It operates with two dedicated branches, 60 financial shops with 100 professional relationship managers all over Italy and the availability of basic service at all 6,000 branches of Intesa Sanpaolo retail network.

The solution to this problem was the creation of a bank (independent legal entity within the Intesa Sanpaolo Group) serving exclusively non-profit clients.  Full and exclusive dedication to non-profit clients means:

  • Banca Prossima is a bank supplying the full range of products and services of a commercial bank and its articles of association forbid grant-making activities.  It can offer the full range of banking services at a competitive price.
  • Banca Prossima is a for-profit company, although its articles of associations allow the use of profits in excess of the cost of capital to feed a special guarantee fund in order to be able to multiply its own lending capability to the non-profit sector
  • Banca Prossima has no clients on which to base its own sustainability other than non-profit entities
  • Banca Prossima is instrumental to mutual self-help within the non-profit sector as earnings deriving from all clients re-enter the non-profit sector via funding for younger, smaller and riskier clients
  • Banca Prossima can offer most products and services at the clients' site, via Internet connection and documentation handling via a dedicated back-office
  • Banca Prossima is committed to professionally serving the non-profit sector.  It is already working on a "Social Rating", e.g. a way to measure creditworthiness of a borrower by taking into account both the institutional features of non-profit organisation and compliance with Basel II requirements.

Impact

As a full-fledged bank, Banca Prossima has to fulfil the whole span of domestic and European regulations on banking activity ranging from full implementation of Basel II criteria, to capital adequacy and transparency in information on financial products, etc.  This leads to stringent lending criteria and costly procedures.

Challenges/Lessons learned:

Commitment to fully support the non-profit sector in Italy and abroad, favouring the 17 foreign countries where Intesa Sanpaolo has a presence and where some of the projects of the Laboratorio Banca & Società are already being implemented and professionally assisting its sustainable growth.

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