Wednesday, January 20, 2021

UniCredit probes Orcel and Thiam as CEO hunt narrows

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UniCredit has reached out to some of the best European bankers available, including Andrea Orcel, Tidjane Thiam and Martin Blessing, as it considers appointing a new managing director after a dispute over the future of the Italian lender.

The board has polled the candidates and will make a decision within the next four weeks, according to people familiar with the process. They face a tight schedule after incumbent Jean Pierre Mustier stepped down last month over a disagreement over strategy.

One of the pioneers is Mr. Orcel, former head of UBS’s investment bank. However, in order to gain regulatory approval, he will likely have to first disentangle himself from a € 112m lawsuit against Santander, said two people familiar with the process. The controversial Italian negotiator is suing the Spanish bank after it withdrew its offer to become CEO in a pay and profile dispute.

Former Credit Suisse Managing Director Thiam – who the Financial Times says is preparing this week to launch a $ 250 million special-purpose acquisition company – has not decided whether or not to pursue the role despite being one of the board’s preferred candidates, the people said.

UniCredit declined to comment. Mr. Thiam, Mr. Orcel and Mr. Blessing could not be reached immediately for comment.

Mr Mustier fell out with the board after insisting on prioritizing wider European expansion, while non-executives insisted he overtake Italy.

The Frenchman also initially resisted government demands for UniCredit to buy Monte dei Paschi di Siena, its troubled public counterpart. Mr. Mustier announced on December 1 that he would resign by the April annual general meeting.

Mr Blessing – the former chief executive of Commerzbank who headed UBS’s wealth management unit until 2019 – is in talks, along with former Bank of America trader Diego De Giorgi have said people close to the situation.

Internally, the co-CEO of commercial bank Niccolò Ubertalli is seen as a strong candidate. The head of Mediobanca, Alberto Nagel, whose company advises Monte dei Paschi, was also approached.

Marina Natale, CEO of Italian asset manager AMCO and former CFO of UniCredit; Matteo del Fante, who runs Poste Italiane, was also contacted about the role.

Future president Pier Carlo Padoan – the former finance minister who oversaw the Monte dei Paschi rescue – is the key figure in the search, which is assisted by headhunter Spencer Stuart.

The bank’s nominations committee met on Tuesday to discuss the less than 10 candidates under consideration and would report to the main board on Wednesday with a shortlist, one of the people said. The council aims to make a final decision by February 10.

The next CEO will also have a difficult task to chart a strategic course between the wishes of the Italian government and the demands of UniCredit’s international investors, already unhappy with the way Mr Mustier’s exit has been handled.

Shareholders pressured the board to choose a candidate with international banking and business experience, as well as a focus on strategic transformation. As UniCredit is Italy’s only systemic financial institution globally, experience working with the ECB is also considered an important attribute.

One of UniCredit’s top 10 shareholders said Mr Orcel was his preferred candidate because he “ticks most of the boxes,” adding: “Any CEO entering this situation should familiarize themselves with global regulators.”

Mr. Orcel has a close relationship with UniCredit, having orchestrated the € 21 billion merger between Credito Italiano and UniCredito in 1998 which formed the group. UniCredit also moved as a client at UBS with Mr. Orcel when he left Merrill Lynch in 2012.

However, the board would prefer someone with experience in commercial lending, not just investment banking. Banking union leader Lando Sileoni, general secretary of FABI, told FT: “We want a non-aggressive Italian who will not close branches and announce thousands of layoffs after the MPS deal.

Another obstacle for the board is the relatively low level of remuneration it can offer. Mr Mustier earned 1.2 million euros in 2019 from UniCredit, far less than his European peers such as Sergio Ermotti, CEO of UBS, who recently left, who received 13.8 million francs (13 million euros), and Carlo Messina, managing director of fierce local rival Intesa Sanpaolo, who is paid € 4.3m.

In order to attract suitable candidates, UniCredit plans to offer much more than Mr. Mustier’s final salary. The Frenchman took a pay cut last April to show solidarity during the first lockout in Italy, leaving his fixed salary at € 900,000.

Yet if the preferred candidate, Mr. Orcel, accepted the job, he would potentially lose millions of dollars in deferred compensation still owed to him by UBS by joining a rival.

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