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Unicredit: Profumo’s luck runs out

Despite transforming UniCredit’s business, Italy’s most controversial banker lost one too many battles with the bank’s shareholders.

Alessandro Profumo’s 13-year tenure at the helm of UniCredit ended in acrimony last month after one dispute too many with the bank’s powerful shareholders, the foundations that have close connections to Italy’s political establishment.

The latest controversy centred on the growing influence of two Libyan institutions – the country’s sovereign wealth fund and its central bank – on UniCredit. Encouraged by Profumo to provide capital to the bank, the two Libyan institutions own a combined 7.4% stake in UniCredit, making them the biggest shareholders. Their presence prompted a backlash from Italian regulators, politicians and shareholders, many of whom were already fed up with Profumo’s perceived haughtiness.

Profumo’s departure has been inevitable for some time. He just about held on to his position following the onset of the financial crisis, which led him to twice ask his shareholders to stump up cash for rights issues. The first, in October 2008, was particularly embarrassing for him after he had said such an undertaking would not be necessary.

Those capital-raising exercises led to clashes with UniCredit’s board and shareholders, with one of the Italian foundations declining to take part in a cash call. That, in turn, led to Profumo calling on the Libyans to buy a stake.

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