In this news, we discuss the UniCredit picks former Treasury chief Padoan as chairman.
MILAN (Reuters) – Italian bank UniCredit CRDI.MI said on Tuesday it had appointed economist Pier Carlo Padoan as director and would appoint the former Treasury chief as chairman when the board is renewed next spring.
The choice of Padoan, 70, a parliamentarian from the ruling center-left PD party, comes as consolidation sweeps the battered banking sector in Europe, putting pressure on CEO Jean Pierre Mustier to abandon his mantra “no mergers and acquisitions ”.
As government minister under former PD chief Matteo Renzi, Padoan oversaw the 2017 rescue of Monte dei Paschi, which the government is now seeking to privatize again.
Sources have said UniCredit is seen as the best candidate to take over Monte dei Paschi, but the Treasury is unwilling to meet UniCredit’s conditions to consider a potential deal.
After the policy hampered early attempts to strike cross-border deals with Société Générale SOGN.PA and Commerzbank CBKG.DE, Mustier has vowed to stay out of the current merger wave.
Rather, he worked on a plan to separate UniCredit’s domestic assets from foreign ones in order to reduce funding costs for the only Italian bank consistently relevant globally.
A source familiar with the matter told Reuters on Tuesday that Mustier is looking to accelerate those plans and seek approval from the current board of directors before his term expires next spring.
Il Sole 24 Ore said directors were divided on the issue and would rather wait until a new board is in place.
UniCredit said Padoan will play an active role in selecting the candidates that the board will propose for its own renewal.
Sources familiar with the matter told Reuters that the proposed asset split could facilitate the mergers, potentially paving the way for UniCredit to pursue an international merger for its overseas operations as well as a nationwide merger in Italy.
“UniCredit is a true pan-European winner with strong Italian roots. I look forward to working with the Board of Directors and the management team to capitalize on these strengths, ”Padoan said in a statement.
Padoan will replace academic Cesare Bisoni, who UniCredit appointed interim president following the sudden death of Fabrizio Saccomanni last year.
Mustier allayed long-standing concerns about UniCredit’s weak capital base by raising € 13 billion in cash from investors and more through asset sales.
But UniCredit’s share price is below levels of mid-2016 when Mustier arrived, around 0.3 times book value.
The dividend ban brought on by COVID-19 has blocked Mustier’s plan to increase investor returns through dividends and buybacks.
“In the event that regulators’ approach to return on capital remains conservative and considering that the competitive landscape has changed in Italy, we believe UniCredit could consider M&A if this represents revenue / profitability or opportunities of capital, ”Citi analyst Azzurra Guelfi said in a note.
Taking control of smaller UBI earlier this year, rival heavyweight Intesa SanPaolo ISP.MI edged out UniCredit as Italy’s biggest bank and consolidated its dominance in the country’s wealthy north.
Il Sole 24 Ore said UniCredit could list 49-50% of the sub-holding company formed to house its foreign assets on the Frankfurt Stock Exchange, raising capital to pursue a domestic merger while still seeking an international deal with the 50% remaining.
Additional reports by Giuseppe Fonte, Giselda Vagnoni, Andrea Mandala and Agnieszka Flak; Edited by Alexander Smith, Ed Osmond and Philippa Fletcher
Original © Thomson Reuters
Originally posted 2020-10-13 11:06:10.