UniCredit terminates Ghizzoni’s tenure

UniCredit bank CEO Federico Ghizzoni waits for a TV interview at the headquarters in Milan, Italy, February 9, 2016. REUTERS/Stefano Rellandini/File Photo©Reuters

Federico Ghizzoni, UniCredit chief executive

UniCredit’s board of directors kicked off the process of seeking a replacement for Federico Ghizzoni as chief executive of Italy’s biggest bank by assets after announcing that it had started negotiations to terminate his contract.

The board of UniCredit held an extraordinary meeting on Tuesday to appoint headhunters to find a replacement for Mr Ghizzoni, who is widely blamed for some of the mis-steps that have contributed to a 40 per cent fall in its share price so far this year.


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Potential successors to Mr Ghizzoni include Alberto Nagel, chief executive of Mediobanca, Jean-Pierre Mustier, a former Société Générale and UniCredit executive, and Marco Morelli, a former Intesa Sanpaolo banker currently at Bank of America Merrill Lynch, according to several people briefed on the matter.

The bank said after the meeting that its board and Mr Ghizzoni “acknowledged that the conditions are now such that it is time for a change at the top of the group”. It added that Mr Ghizzoni, who had been mooted as potential candidate to step up to chairman, had agreed to stay in office until his successor was found.

It added: “The board of directors unanimously thanked Federico Ghizzoni for the high quality of his work in the interests of the UniCredit group, its shareholders and employees. The board also expressed its genuine appreciation for the great skill and dedication with which he led the bank under extremely challenging market conditions.”

The unrest at Italy’s only globally significant financial institution comes after weeks of investor discontent about its weak governance, low capital levels and poor share price performance. It is trading at less than half its tangible book value — one of the lowest valuations of any large bank in Europe.

Mr Ghizzoni, who has been CEO for six years, is also under pressure following UniCredit’s agreement to underwrite a risky €1.5bn capital raising at regional bank Popolare di Vicenza in spite of UniCredit’s already thin capital position.

The cash call failed to attract sufficient investors and was ultimately backstopped by the systemic rescue fund dubbed Atlante. A rival bank chairman described the situation as “a soap opera”. Mr Ghizzoni was later summoned before the directors to explain the move, which was not approved at board level.

One banker working closely with UniCredit said he expected whoever took over to spend a few months reshaping the top management team and adjusting the strategy before launching a share sale to raise the €5bn-€10bn many analysts think is needed to boost its capital position.

UniCredit is also expected to raise capital from selling assets, including Fineco, its online brokerage; Bank Pekao, the second-largest bank in Poland, and Yapi Kredi, the fourth-largest Turkish lender, according to people familiar with the matter.

However, the planned €5.5bn merger of Pioneer, UniCredit’s asset management operation, with Santander’s asset management unit has been put on hold more than 18 months after it was first agreed — underlining the leadership vacuum at the Italian bank.

Mr Vita’s governance of the board has also been under scrutiny since the Popolare Vicenza capital raising and several bankers said the octogenarian should be leaving before Mr Ghizzoni.

Lucrezia Reichlin, an economist at London Business School who sits on UniCredit’s board as an independent director, is considered another potential future chairman of the bank.

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