UniCredit Board Said to Meet as CEO Search Seen Taking Weeks

  • Company’s succession process said to possibly take weeks
  • Vita tells Il Sole 24 Ore that nationality doesn’t matter

UniCredit SpA’s board of directors, meeting late Thursday, discussed the type of manager required to succeed Chief Executive Officer Federico Ghizzoni, in a process that may take weeks, according to people with knowledge of the talks.

The meeting was attended by a representative from Egon Zehnder International Inc., the executive-search firm compiling a shortlist of candidates to lead Italy’s largest bank, though specific names weren’t discussed, said the people, who asked not be identified because the process is private. The board also discussed the bank’s business plan and ways to improve capital and profitability, according to the people.

“The length of time needed to select the top manager is a further signal that there is little agreement among shareholders,” Luca Comi an analyst at ICBPI, who has a buy recommendation on the stock, wrote in a note on Friday.

Ghizzoni, 60, agreed to step down last month as investors demanded a change in management, a move that may pave the way for a strategy review and a possible capital increase or asset sales. While the CEO led UniCredit through the sovereign-debt crisis, regulatory changes and Italy’s longest recession since World War II, he struggled to bolster returns as bad loans mounted.

UniCredit has lost more than half of its value this year, making it the fifth-worst performer on the 47-member Stoxx 600 Banks Index, which has dropped 22 percent. The shares, which have declined about 80 percent since Ghizzoni took the CEO job in September 2010, fell 4.4 percent to 2.43 euros at 12:27 p.m. in Milan.

UniCredit will choose a new CEO within two months, Chairman Giuseppe Vita told Il Sole 24 Ore in an interview published on Friday. While the candidate must have a banking background, the nationality doesn’t matter, he said. Ghizzoni will depart once a successor is chosen.

“The period given on the selection of the new CEO is admittedly long and will likely expose the stock to further pressure,” Andrea Filtri, an analyst at Mediobanca SpA with a neutral recommendation on the shares, wrote in a note Friday. “We continue to stay on the sidelines of this stock until a new CEO is appointed and a new strategy unveils what UniCredit will be looking like in the future.”

Morelli, Nagel

People with knowledge of the process had previously said Ghizzoni’s possible successors include Marco Morelli, head of Bank of America Corp.’s Italian operations, and Mediobanca CEO Alberto Nagel. Other candidates include UBS Group AG investment-banking chief Andrea Orcel, Deutsche Bank AG’s top executive in Italy, Flavio Valeri, the head of Credit Agricole SA’s Cariparma unit, Giampiero Maioli, Cassa Depositi e Prestiti SpA CEO Fabio Gallia and former UniCredit investment-banking boss Jean-Pierre Mustier, the people said.

A spokeswoman at Egon Zehnder declined to comment.

Ghizzoni’s revised strategic plan, unveiled in November, was seen by some investors as not ambitious enough to shake off the bank’s status as one of Europe’s most poorly capitalized lenders. He has since repeatedly ruled out selling shares, instead focusing on improving profit and divesting assets as well as lowering costs through job cuts.

Capital Plans

Under the latest business plan, the company announced thousands of job cuts and lowered its annual profit target for 2018 to 5.3 billion euros ($6 billion) from 6.6 billion euros. UniCredit’s common equity Tier 1 ratio, a measure of financial strength, fell to 10.5 percent at the end of March from 10.7 percent three months earlier.

Pressure on the bank’s senior management increased after its decision to be the sole underwriter of Banca Popolare di Vicenza SpA 1.5 billion-euro share sale. Investors balked at the initial public offering and the government-orchestrated Atlante fund, which includes a 850 million-euro investment from UniCredit, stepped in to buy the stock.

Among options to boost its capital buffer, the lender is considering the sale of a stake in online broker FinecoBank SpA and reviewing holdings in Poland and Turkey, people with knowledge of the discussions said in May. No decision has been made and the management change may affect the outcome, they said.

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