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Banking

Mustier exit leaves UniCredit hanging

Jean Pierre Mustier’s decision to leave UniCredit raises the alarming prospect of the crippled Banca Monte dei Paschi di Siena pulling down a much bigger and stronger Italian bank.

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The poor performance of UniCredit’s shares this year, even versus peers, has given his opponents on the board a reason to turn against Jean Pierre Mustier’s strategy.

However, for many of the bank’s international shareholders, his presence at the helm remained the biggest, if not only, reason to own the bank.

The fact that Mustier is now unexpectedly leaving at the end of his current term in April – amid widespread speculation that the board wanted him to consider buying one of Europe’s weakest banks – makes things much worse.

The risk for UniCredit, Italy and Europe is that a smaller and weaker institution – Banca Monte dei Paschi di Siena (MPS) – pulls down the bigger and stronger one, UniCredit.

Mustier, perhaps, was a little too intransigent against the principle of doing M&A in Italy. This looked bad in Italy not just because he is French but also because he previously seemed relatively open to deal-making abroad, and even to separating out UniCredit’s international operations.

Damaged franchise

Given the options available, however, rejecting MPS on almost any terms is understandable. Any private bank would baulk at the idea of buying such a damaged franchise without the largest amount of state support.

Now,


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