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UniCredit’s Orcel asks investors to put faith in capital returns

Chief executive Andrea Orcel’s new plan for UniCredit has little of the asset-selling drama of his predecessor. Whether it works better than the old strategy may be longer in the telling.

A new dawn for the bank at UniCredit Towers in Milan. Photo: Reuters

The timing was the same: a few weeks before Christmas and after a good part of the year had gone by since his rocky installation. But Andrea Orcel’s new strategic plan for UniCredit was very different from the ones his predecessor Jean Pierre Mustier set out in 2016 and then again in late 2019.

This time, there is no news of a rights issue or asset sale.

Orcel insisted that the headline-grabbing target of increasing capital distributions to €16 billion during the next three years – about 65% of UniCredit’s market capitalization – would come from what he called “sustainable organic capital generation”. In other words, it won’t come from unsustainable cost cuts and asset sales.

The size of the distribution plan sent the bank’s shares up sharply.

We will bring our unique network of 13 banks together to deliver the benefits of scale
Andrea Orcel, UniCredit

However, after he backed out of talks with the Italian government for a purchase of Banca Monte dei Paschi di Siena, excitement around any comments from Orcel on that front has gone.

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