Andrea Orcel is on his way to becoming UniCredit’s chief executive, after the bank’s key domestic, as well as international, shareholders decided they wanted a strong counterweight to the fear of Italian government influence.
Orcel, though, could also win over the board – especially chairman designate Pier Carlo Padoan – whose bigger concern is for a break with the anti-M&A intransigence and perceived aloof leadership of Jean Pierre Mustier.
Orcel’s status as an Italian could give him an advantage in his personal dealings in Italy, while his ability to command respect abroad, like Mustier, may appeal to financially orientated shareholders, such as Italian billionaire Leonardo Del Vecchio’s Delfin, which owns 1.9%.
For the board, the best thing about Orcel is his appointment would by no means preclude the prospect of doing M&A
Padoan will now hope a swiftly agreed choice of Orcel will get the bank out of the limbo it has been in since Mustier announced in November his decision to step down.
The new CEO could get to work at UniCredit as soon as mid-February, Euromoney understands. Although Orcel will not formally take over as CEO until after the bank’s annual general meeting in April, Mustier is now stepping down after the bank’s fourth-quarter results.
As Padoan would surely acknowledge, the ideal candidate does not exist. That is why he seems ready to overlook the complication of Orcel’s pay dispute with Banco Santander, which rowed back on naming him its CEO in 2018, and that he will presumably also come at a much higher price than Mustier.
It was never going to be easy to find an available Italian-speaking candidate with anywhere near as much international renown in finance as Orcel. Former Bank of America Merrill Lynch investment banker Diego De Giorgi comes closest, but he is seen as too close to Mustier.
Orcel is one of the world’s best-known investment bankers, ultimately presiding over UBS’s investment bank.
In Italian banking, he has engineered good deals, such as the formative Unicredito-Credito Italiano deal in the late 1990s, as well as bad ones, such as Banca Monte dei Paschi di Siena’s (MPS) 2007 takeover of Banca Antonveneta.
The board did not restrict its search to Italian speakers. Nevertheless, Padoan has made clear in interviews that the bank was looking for a candidate with a big international profile – and one with what he called “inclusive leadership”.
While inclusivity is a vague quality, Mustier was the bank’s first foreign CEO, and a Frenchman who does not speak Italian. That made it harder to handle the rapidity of the Italian press, inter-personal dynamics in the bank’s Milan headquarters, and its Italian-dominated board.
Under the new CEO, a move away from Mustier’s co-head structure at departmental level is likely. This could go some way to increasing accountability below the group CEO and facilitate communication.
Above all, Padoan will want a much closer CEO-chairman relationship than the often-fractious one between Mustier and Cesare Bisoni, who is retiring in April. It is that relationship that ultimately led to Mustier’s exit.
The new CEO will need to determine strategy much more closely with the board, which is notably less averse than Mustier to doing M&A, especially in Italy. This is why the international reputation of someone like Orcel is so important.
If being Italian was decisive, UniCredit insiders would have a stronger chance – as would figures such as Fabio Gallia, CEO of national development bank Cassa Depositi e Prestiti (CDP) and former head of BNP Paribas in Italy.
Politics
In the end, though, less internationally well-known candidates might reinforce the impression of a soft government takeover of the bank, after the arrival of former finance minister Padoan and the departure of Mustier, who was more in favour of international M&A, if anything.
Inclusivity, clearly, does not mean appeasing politicians in favour of outright bank nationalization – neither appeasing trade unions, who will surely bristle at someone so symbolic of swashbuckling capitalism as Orcel. The unions have had to sign up to Mustier’s cuts anyway.
For the board, however, the best thing about Orcel is that his appointment would by no means preclude the prospect of doing M&A: including, at the right terms, MPS, which the government is desperate to sell to UniCredit.
On the contrary. Orcel’s private-sector instincts seem indisputable, because he has spent his career doing M&A. Given the accelerating pace of bank M&A, especially in Italy, this is probably more important to the board than his lack of commercial-banking experience.
