UniCredit SpA appointed Deputy Chief Executive Officer Roberto Nicastro to a new position of general manager in an attempt to smooth relations with investors, while Sergio Ermotti, head of the investment bank, decided to step down after the management shakeup.
Nicastro will oversee the commercial banking business, private banking and the global transactions unit, the Milan- based lender said in a statement today. Paolo Fiorentino, a deputy CEO, was named chief operating officer, while Ermotti will leave once a replacement is found.
Ermotti was in the running for the role of general manager, the No. 2 executive position at Italy’s biggest bank.
CEO Federico Ghizzoni, 55, who replaced Alessandro Profumo last month, is putting in place a new management structure in an effort to end the investor infighting that led to Profumo’s ouster following clashes with Italian banking foundations. Shareholders, including Fondazione Cassamarca, urged Italy’s biggest bank to create a general manager position to focus on local issues.
“This is an indication of the direction UniCredit will take, more toward retail banking than investment banking,” said Angelo Manca a portfolio manager at Ockham Capital Partners in London. “Shareholders in the end give the strategic direction to the business,” he said.
Nicastro, 45, who was considered for the CEO job last month, is a former McKinsey & Co. consultant and joined Credito Italiano as head of planning in 1997. In 2003 he was appointed head of the bank’s retail division and became one of the deputy CEOs in 2007.
He beat out 50-year-old Ermotti, a Swiss national who worked 18 years at Merrill Lynch and joined UniCredit in 2005 as head of its markets and investment banking division. He was named a deputy CEO in July 2007.
As investment banking chief Ermotti, he also supervised global transaction and private banking, which now will be shifted to Nicastro’s unit. Ermotti had aimed to compete with the world’s top securities firms as mergers soared and business flourished before the subprime crisis spread and credit became scarce. UniCredit in 2007 helped finance Kohlberg Kravis Roberts & Co.’s 10.1 billion-pound ($16 billion) bid for Alliance Boots Plc. He later scaled back the plan to focus on corporate and investment banking business in the lender’s home markets.
The Italian bank last year ranked 20th among merger advisers in its four core markets of Italy, Germany, Poland and Austria. Morgan Stanley and Goldman Sachs were the top two banks. In contrast, UniCredit was the top loan arranger in Italy, Germany, Poland and Austria last year, the data show.
UniCredit helped manage the $1.3 billion IPO of Tauron Polska Energia SA in June and is among the banks managing Enel Green Power SpA’s 3.4 billion-euro IPO.
“Ermotti’s exit may hurt the stock in the short term because he was liked by the market,” said Massimiliano Romano, head of research at Concentric Italy in Milan.
Pretax profit at the corporate and investment banking unit rose to 1.6 billion euros ($2.2 billion) in the first half from 1.2 billion euros in the year-earlier period, UniCredit said in August.
Italian banking foundations, which own more than 11 percent of UniCredit, have been pressing for a more active role in management decisions. Former CEO Profumo, 53, stepped down after relations soured with some investors, including Fondazione Cariverona, which complained that he didn’t consult them before making key decisions.
The tension with the banking foundations increased after one of two Libyan investors raised its holdings, ultimately forcing Profumo to quit at a Sept. 21 board meeting.
The regional institutions, which in total oversee 49 billion euros of assets, use money generated by their holdings in banks to fund philanthropic programs at schools and museums. They are partly run by politicians who advocate more investment at home.
The board also created a new chief operating officer position. Fiorentino will report to Ghizzoni and will be responsible for operations, information technology, human resources and communications.
Fiorentino, 54, started his professional career in Credito Italiano in 1981 dealing with retail and corporate customers. In August 2003 he was appointed deputy general manager of the company’s New Europe division.