UniCredit Appoints Mustier CEO to Spearhead Bank’s Overhaul

  • He had served as head of investment bank at UniCredit
  • Mustier will take over from July 12 as Italian bank’s CEO

UniCredit SpA appointed Jean Pierre Mustier as the first non-Italian to run the country’s largest lender, tapping a former insider to spearhead an overhaul as the nation’s banking system slides deeper into crisis.

Mustier, 55, will take over from July 12, replacing departing Federico Ghizzoni, the Milan-based company said in a statement on Thursday. The board of directors “came to the unanimous conclusion” that Mustier was the “right person to assume the role,” after the bank assessed several candidates “with international profile” for the role, it said.

Jean-Pierre Mustier

Photographer: Antoine Antoniol/Bloomberg

The appointment ends a search for a new CEO that dragged on as the shares tumbled, even before Britain’s decision to leave the European Union roiled financial markets and prompted Italy to consider state aid for its ailing banks. Mustier, who ran the investment bank at UniCredit before departing in 2014, is likely to consider asset sales and a rights offer to shore up a bank struggling with bad loans, according to analysts.

“UniCredit needs a strong personality able to restructure the business,” said Stefano Girola, who helps manage about 40 billion euros ($45 billion) at Syz Asset Management in Lugano, Switzerland. “Mustier matches the expectations with his experience in investment banking. He can deal with extraordinary operations including non-core disposals and a likely rights issue.”

He intends to implement a new strategic plan whose core objectives are strengthening the bank’s capital ratios and “improving our bottom line through closer relationships with our customers and a very disciplined risk approach,” Mustier said in a statement.

The shares reversed earlier losses and advanced 2.3 percent in Milan. The company is trading at about 26 percent of its tangible book value compared with 67 percent at Italy’s Intesa Sanpaolo SpA. The discount indicates that it’s worth less than what investors would theoretically expect to receive if the firm liquidated its assets.

Mustier, a 28-year veteran of the European securities industry, joins from Tikehau Capital, an investment management company. He stepped down as head of UniCredit’s corporate and investment banking business in 2014 after serving the bank for three years.

He was previously at Societe Generale SA, working his way through the ranks with positions at the investment bank in Paris, Tokyo and Hong Kong, having joined the French lender in 1987 as a stock-options trader. In 2003, he was appointed head of the corporate and investment bank, before taking over the investment-management division in 2008.

Bad Loans

Mustier was running the corporate and investment banking unit at Societe Generale in 2008 when the bank incurred a 4.9 billion-euro trading loss. While judges initially found trader Jerome Kerviel solely responsible for the trading loss, courts are re-examining how much responsibility should be borne by the Paris-based bank.

At UniCredit, Mustier will have to tackle about 38 billion euros in non-performing loans, a pile that has mounted in recent years, forcing the bank to divert income for provisions. The lender, which makes most of its money from lending, has also been squeezed by record-low interest rates, eroding margins, and the longest recession since World War II.

Asset Sales

With Italian banks struggling to lower about 360 billion euros in non-performing loans, the Italian government has been sounding out regulators on ways to shore up its banks after a renewed selloff in the wake of the British referendum. Authorities in Rome are considering measures that may inject as much as 40 billion euros into banks, possibly by providing capital or pledging guarantees, a person familiar has said.

Ghizzoni, 60, who had hired Mustier in 2011, resigned in May after falling out of favor with shareholders partly frustrated by the bank’s low profitability. Net income declined 10 percent last year, leaving the lender facing a cash call to rebuild capital buffers.

Giovanni Razzoli, an analyst at Equita SIM SpA, forecasts UniCredit needs to raise between 5 billion euros and 10 billion euros to meet tougher capital requirements. The lender was considering the sale of a stake in online bank FinecoBank SpA and reviewing holdings in Poland and Turkey, people with knowledge of the discussions said in May.

Mustier’s appointment will be assessed by the European Central Bank.

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