BTP Italia Communication Plan:A Case Study

Working Party On Information - Brussels - 4th June 2013

Outline

What is BTP Italia?

Why a new bond tailored to retail investors?

The Communication Plan: Goals, Message, Target & Tools

Results

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What is BTP Italia? BTP Italia is the first Italian Treasury inflation-linked 4-year bond

conceived to meet the needs of retail investors. Indeed it is a medium term financial investment opportunity that yields a return indexed to the domestic cost of living. Its main characteristics are: guaranteed minimum annual real interest rate semi-annual coupons indexed to inflation semi-annual payment of the revaluation of principal accrued because of inflation bonus payment at maturity

An innovative placement mechanism allows anyone to directly purchase the bond at issuance through online trading systems, with total certainty of being allotted for the amount requested (The rest of Italian bonds are instead issued through auctions reserved to authorized operators. Retail investors must book the bond in advance at their bank’s desk and are not certain of being allocated for the amount requested)

Launched for the first time in 2012, during the global financial market crisis, now the total BTP Italia outstanding amounts to 44.104 billions, collected in 4 different placements (March 2012, June 2012, October 2012, April 2013)

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Why a new bond tailored to retail investors?At the end of 2011, the Treasury started to study how to better exploit the traditional Italian retail propensity to invest directly in government bonds, because several elements contributed to create favorable conditions to carry out this initiative:

The good success of the initiative - “BTP Day” (“Government Bond Day”) launched by the Italian Banking Association (ABI), on 28th November, 2011

The awareness that a further diversification of the investor’s base could help to better face difficult market situations

IT progress: the growing role of new electronic platforms and trading tools, facilitating the access for non-professional investors

Increasing use of home banking facilities by Italian households

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The Communication Plan: Goals

1. To illustrate the financial characteristics of the bond.

2. To inform about the dates of the placement period in which it was possible to buy the bond without fees.

3. To ensure retail investors about the convenience and the safety in investing in a such a new specific bond

4. To inform about the simple and direct asset management through online trading system that allows retail investors to better manage their savings

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The Communication Plan: Target

The target is mainly Italian people. In particular:

1. Italian retail investors interested to switch to longer maturity investments (i.e. from the one year BOT – Treasury Bill to a 4 year bond)

2. Younger investors or whoever is familiar with IT technologies to manage investments autonomously through on-line trading systems

3. Institutional investors (either Italian and foreign ones) to further diversify their portfolio

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BTP Italia

The secure investment to protect savings

accessible from any «port»

The Piggy Bank turns Hi-Tech to preserve the Italians’ savings

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"Security“: BTP Italia is a safe investment that protects savings and guarantees a minimum annual real rate;

"Innovation": the message stressed the value of innovation. The “piggy bank” is completely renewed since now it is possible to purchase the bond through the online trading systems, not only at the investor’s bank desk or at post offices;

"Confidence": the Public Administration has shortened the distance with retail investors by opening new "gateways" that allow to invest directly in Italian government bonds;

“in Italy I trust“: as the name wants to suggest this bond is tailored to domestic demand, asking retail investors to trust the Government that, on the other hand, commits to protect their savings.

The Communication Plan: Tools Communication Mix

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The Treasury managed different tools to support the campaign and deliver an effective and coherent message:•Radio and TV Advertising: creation of a TV and radio spot aired on the free spaces reserved to Government’s strategic campaigns on the public radio and TV RAI networks (2 weeks before the placement).

•Media relation: the most effective information tool. Press conference for the first placement then a fixed calendar of press releases announcing relevant information about the bond (i.e. the date of placements, the minimum guaranteed annual real coupon rate, the results) together with interviews given by the Head of Italian Public Debt Directorate on main national economic media to explain the product.

•Events: debates within the investor community at the Italian Stock Exchange HQ, speeches by the Head of the Italian Treasury presenting the products at investors meetings, etc.

•Online Customer Care: by e-mail.

•Online Information: detailed information published on the official web sites describing the bond and offering always updated FAQs.

•Train Station Board Advertising: used only in the third and fourth placements, they were the killer-tool to inform people about the BTP Italia conditions and dates of placement. The billboards were posted at Italy's 100 main train stations including the large ones as Rome, Milan and Naples.

•Partnership Marketing: the advertising campaign was supported also by Borsa Italiana and Poste Italiane that were partners of the project.

A success story coherent with communication

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March 2012

June 2012 October 2012

April 2013

Nr. Website Unique Visitors

12,758 8,771 43,790 24,931

Nr. Contracts 133,479 44,688 186,698 196,509

Turnover (mln.€)

7,291.49 1,738.49 18,017.98 17,056.41

A great success among Italian retail investors

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For all the four placements, more than 80 per cent of the contracts concluded had a size less than 50,000 euro and for the last placement (April 2013) more than 50% of the contracts had a size of less than 20,000 Euros.

Contracts carried out via-home banking show an increasing trend in all the placements, from 20% to 30% of the total requests received through the banking networks.

Results: why people liked it

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1. A strong success due to the appeal of the bond itself, as the financial characteristics and also the fact that whoever purchases the bond during the placement period can be assured of always being allotted for the quantity requested.

2. Timing was a killer-factor:

Availability of liquidity assets (Italian government bonds that expire in the same period) just before the placement

Intense communication focused in the 3-4 weeks before placement

3. Among the communication tools adopted, the most efficient have been the traditional ones (media relations and billboards) and also the strategy to use a complete communication mix in a coherent way and in a short period of time has been successful.

4. Finally, the accurate and updated online communication and the prompt online customer care by e-mail to answer people‘ requests has been fundamental so that they feel “confident” with the purchase.

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Many thanks for your attention!

For further information please visit:

www.tesoro.it

www.publicdebt.it