Italy’s UniCredit hastens CEO search as shares sink

Italy’s UniCredit hastens CEO search as shares sink

Italy’s biggest lender, UniCredit , is speeding up its search for a new chief, under pressure from Italian authorities who fear it is being singled out for a speculative attack in a post-Brexit sell-off of bank shares, sources said on Wednesday.

One source familiar with the matter said a decision could be made by its nominations committee on Thursday and that Frenchman Jean-Pierre Mustier, a former investment banking boss at Societe Generale and UniCredit, was a front-runner for the job.

“Mustier is an external choice but he knows the bank well,” the source said. Mustier, who worked at UniCredit in 2011-2014 and is currently a partner at fund manager Tikehau Capital, could not be immediately reached for comment.

UniCredit, the only Italian bank whose stability is deemed important to the global financial system, has been hit especially hard in a sell-off of European bank shares triggered by Britain’s vote last week to quit the European Union.

It has the highest amount of bad loans among Italian lenders and has been in limbo since CEO Federico Ghizzoni agreed to step down on May 24, pending the appointment of a successor. He had faced shareholder discontent over the bank’s poor share price performance, stretched capital base and weak governance.

Another source said the choice of Mustier was opposed by one influential Italian shareholder. Some shareholders are pushing for another Italian to take over the reins of the bank.

Italian candidates tipped for the job include former Intesa Sanpaolo CEO Corrado Passera, UBI Banca chief executive Victor Massiah, the head of Deutsche Bank in Italy, Flavio Valeri, and the boss of Credit Agricole’s Italian unit, Giampiero Maioli.

UniCredit shares have slumped nearly 40 percent since Ghizzoni said he would quit, and tellingly fell on Tuesday even as Italian bank stocks rebounded after a two-day slump triggered by Britain’s vote to leave the European Union.

Italian banks are carrying 360 billion euros ($400 billion)in bad debts, or a third of the euro zone’s total, raising concerns that further heavy share price falls could erode confidence among both their investors and depositors.

Top government and central bank officials along with shareholders and bondholders have called for UniCredit to find a new CEO quickly.

A source close to Abu-Dhabi investment firm Aabar, which is UniCredit’s second biggest shareholder behind BlackRock, said on Wednesday it was worried by the falling share price.

The bank has mandated head hunters Egon Zehnder to select candidates and Thursday’s nominations committee is expected to come up with a shortlist, if not a single name.

One source said any shortlist would likely include an internal name, although the chances of such an appointment were slim given investor demands for a clear break with the past.

“There is pressure from the market, from shareholders and from the bank’s employees for a quick decision. Brexit certainly adds to the pressure, but the bank also needs to find the right captain to navigate it in such choppy waters,” the source said, adding the choice may take another few days.

Analysts say Unicredit’s new boss will need to launch a capital increase of up to 10 billion euros and sell assets to boost the bank’s financial strength as well as trim a bloated and costly international network.


Source: Reuters

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