MILAN Italian fund managers are aiming for a slice of an estimated 68 billion euro (58 billion pound) savings jackpot by getting depositors who have shifted cash out of Italy's troubled banks to invest in a new government-backed scheme.
A law encouraging savers to invest in small and medium-sized Italian firms has spawned "Pir" funds which give savers a tax break if they stay invested for at least five years.
The scheme, which mirrors Britain's Individual Saving Accounts and France's "plans d'épargne", is part of a long-term plan to divert retail savings to Italy's dynamic SMEs.
But while it will suit some of Italy's stronger banks with asset management businesses, it comes at a bad time for others as billions of euros in deposits have been leaving several struggling lenders over the past year or so.
Last year, the country's third-largest lender, Monte dei Paschi di Siena (BMPS.MI), alone lost 28 billion euros in deposits as customers feared for the bank's future.
Those ready to offer shelter to these depositors include the fund arms of banks such as Intesa Sanpaolo (ISP.MI) or institutions such as Banca Mediolanum (BMED.MI).
For the fund managers, the new funds offer a potentially rich source of fees, given they will be actively managed and come with an incentive to stay invested for at least five years.
Management fees alone on such products can range from 1.25 to 1.35 percent, consumer association Aduc said.
"It could be another gift to the (stronger) banks, especially those targeting cash and securities flying out of troubled lenders," said Carlo Gentili, founder and chief executive of fund manager Nextam Partners.
Pir funds, which come with a maximum investment threshold of 30,000 euros per year, would appeal mostly to retail investors, Gentili said, while research company Intermonte estimates they could attract up to 68 billion euros within five years.
Regulated savings or tax-free savings accounts in France account for a large chunk of household bank deposits, reaching 700 billion euros out of 4,460 trillion euros at the end of 2015, according to the French central bank.
In Italy, much of the initial inflow into the new products is expected to come from money now parked in funds that are not Pir-compliant, Intermonte says.
But some industry experts doubt they will suit risk-averse retail clients, who have so far put their cash only in Italian government bonds or bank deposits, where they get minimal returns, because they will be invested 70 percent in Italian assets and lack geographical diversity.
"We believe the tax benefit should not be considered as a gift to the saver... It is there to remunerate the risk the investor is taking," said Paolo Galvani, chairman and co-founder of financial adviser MoneyFarm.
(Additional reporting by Maya Nikolaeva; Editing by Mark Bendeich and Alexander Smith)