UniCredit private banking sees net inflows

By Deepa Babington

GENEVA (Reuters) - Italian bank UniCredit's (CRDI.MI: Quote, Profile, Research, Stock Buzz) private banking arm is still enjoying a positive inflow of funds and clients though market turmoil could crimp revenues, the head of its wealth management unit said.

UniCredit's private bank saw net inflow of 1.5 billion euros in the first six months of 2008 despite the global financial crisis and continued to register a positive flow of funds in the second half of the year, said Dario Prunotto, CEO of UniCredit Private Banking.

"We are suffering the most severe crisis we've ever had since the start of our bank," Prunotto told the Reuters Wealth Management Summit.

"In general terms, we are positive in terms of net inflows...The business will be affected in terms of lower flow of revenues; that we can compensate only with our pace of growth to be continued and with more attention on the cost side."

Clients have been asking more questions on where to park their money as markets plunge, and UniCredit has been advising them to keep their assets liquid with reduced exposure to the stock market, said Prunotto.

"Our advice now is don't panic or think that the world is finished, maybe a recovery will not be so quick but with a structured approach it is possible to build an efficient portfolio," he said.

"We are advising clients to be liquid without any risk in terms of markets because it's exactly what the client wants today. In fact, we have been underweight on shares for a year now."

Still, market volatility means there are bargains up for grabs, though not all investors may be up for buying, he said.

"In rational terms, we have a lot of companies with a misleading price in the market but this could be an opportunity, a valid opportunity to invest in a programme that is not (designed ) for one day but for 6 months," Prunotto said.

EASTERN EUROPE PLANS NOT ON HOLD

He said plans to develop UniCredit's private banking business in the fast-growing economies of central and eastern Europe had not been put on hold, adding the focus was on leveraging the bank's existing presence there rather than seeking acquisitions.

Poland would be one of the first countries in which to develop private banking, Prunotto said.

"We are not planning to acquire ... we are trying to leverage our presence to build private banking departments in the countries where we are already present," Prunotto said.

"Certainly these countries are very attractive in terms of new wealth building that are normally related to their pace of growth."

Among Italian banks, UniCredit has come under scrutiny the most during the financial crisis because of its exposure to foreign markets, and the bank has announced plans to ask investors for funds to boost capital.  Continued...