Banking: UniCredit names new CEE head

The management reshuffle at UniCredit continues. Two weeks after setting out his strategy for central and eastern Europe, new chief executive Federico Ghizzoni – himself a former head of CEE at the group – named the man who will be charged with implementing it.

Gianni Franco Papa is a Credito Italiano veteran with 20 years’ experience of international banking, including five years in Singapore as head of the group’s Asia operations and a similar stint in New York as director for the Americas. Following the merger of UniCredit and HVB in 2006, he spent two years in Slovakia integrating the local subsidiaries of the two groups, and in early 2008 he took charge of UniCredit’s newly acquired Ukrainian operation, Ukrasotsbank.

In October last year, as part of the management shake-up following the departure of former chief executive Alessandro Profumo, Papa moved to Vienna to take up the position of head of CEE corporate and investment banking, and on December 14 was handed the top job in the region.

"The cost of capital is growing, so we have to concentrate where the opportunities are bigger" Gianni Franco Papa, UniCredit

It will be a challenge. UniCredit is well positioned in the region’s most promising economies – its Polish subsidiary, Bank Pekao, is second only to state-controlled PKO Bank and it has the fourth-largest privately owned bank in Turkey – but in the race for expansion immediately pre-crisis it also acquired some less desirable assets in countries such as Kazakhstan.

In his strategic outline, presented in London on December 3, Ghizzoni reiterated UniCredit’s commitment to CEE but indicated that expansion would be more carefully targeted in future. "The cost of capital is growing, so we have to concentrate where the opportunities are bigger," Papa tells Euromoney, in one of his first interviews after taking on his new job.

The exact capital allocation will be announced when UniCredit clarifies its medium-term strategy this summer, but Euromoney understands that it will be increased to 30% of the group’s resources from the present 20%. The main beneficiaries will be the subsidiaries in Russia, Turkey and Poland, but there are also plans to expand the branch network in Romania.

Papa’s remit will also include overseeing continuing restructuring in the less successful operations, but he insists that disposals are not on the agenda. "We are re-looking at countries where we are not among the top five banks, but this does not mean to exit the countries but to reshape our local business, maybe to adapt our approach," he says. "If we have 3% to 4% of the market in a country overall but a stronger presence in corporate banking for instance, we will probably focus more on the segment where we are stronger. We may switch to the approach of a boutique bank."

He is a firm believer, however, in the growth potential of the region. "The last couple of years we have been tied up with restructuring, transformation, reduction of costs and so on," he says. "In 2011 we want to go back to our customers and concentrate on business. There are a lot of opportunities – there are banks that have pulled out from the region, there are banks that are still in trouble and so they’re not really pushing for business in the region. We are there, we want to do more business."