UniCredit May Need New Leaders for Change, Del Vecchio Says

  • Bank's shares have plunged since revamp announced in November
  • Change in management may be `well perceived' by the market

UniCredit SpA needs a major overhaul that may only come about through a change in leadership, according to Leonardo Del Vecchio, chairman of Luxottica Group SpA, who holds a stake in the Italian lender.

UniCredit Chief Executive Officer Federico Ghizzoni “is a good banker, but maybe today the bank needs such radical changes that can only come about via discontinuity” in leadership, Del Vecchio said in an interview with La Repubblica that was confirmed by Luxottica’s spokesman.

Italy’s biggest bank is struggling to boost profit margins under pressure from record-low interest rates and stricter capital rules, hampered compounded by a complex structure spread across 17 countries. Ghizzoni approved a new strategic plan in November, just a year after his previous overhaul, focusing on cost cutting and simplification. The stock has since dropped by about 50 percent.

“It’s evident that investors are skeptical about the recent company plans and this has over penalized the stock,” said Luca Rubini, a managing director at Fidentiis Equities in Milan. “A clearer stance on the strategy, even including a management discontinuity, would be well perceived by the market.”

UniCredit has declined 37 percent this year compared with a 24 percent drop in the Euro STOXX Banks Index and an 18 percent slide in the Italian Benchmark FTSE MIB Index. The bank’s stock was down 0.8 percent at 3.17 euros in Milan trading as of 1:15 p.m.

Ghizzoni has the backing of investors and will keep his post, Luca Cordero di Montezemolo, one of UniCredit’s three deputy chairmen, said last week on the sidelines of an event in Milan.

“I think his remarks are a sign that the the top management can still rely on investors’ support,” said Wolfram Mrowetz, chairman of Alisei SIM, a Milan brokerage. Montezemeolo tends to express the view of Aabar Luxembourg SARL, the bank’s biggest investor, he said.

Ghizzoni, CEO of the Milan-based lender since 2010, will speak with analysts and journalists tomorrow after the bank publishes earnings. UniCredit may post a loss of 106.7 million euros in the fourth quarter, according to the average estimate of seven analysts surveyed by Bloomberg. Profit will be hit by charges related to the sale of its Ukraine unit and costs for its share of winding down four troubled Italian lenders.

Del Vecchio, who founded Luxottica in 1961, is Italy’s second-richest man, with a net worth of $18.8 billion, according to the Bloomberg Billionaires Index. The Milan-based company is world’s biggest maker of eyeglasses, with brands including Ray-Ban.

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