Orcel, Gallia Face Off in Race to Replace UniCredit CEO Mustier

Andrea Orcel and Fabio Gallia are readying their final push in the contest to become CEO of UniCredit SpA as the Italian bank’s board prepares to make one of its biggest strategic decisions in years.

The two men are seen as the clear frontrunners with internal candidate Carlo Vivaldi seen as a much less likely contender, people with knowledge of the matter said.

Both candidates have their backers among UniCredit investors, though come with contrasting backgrounds. Orcel is the hard-charging former UBS Group AG investment banker known for demanding results and pushing his troops hard to get them. Gallia, while also having banking experience, spent most of his career inside Italian finance and industry, including shipbuilding company Fincantieri.

Representatives for UniCredit and Gallia declined to comment. Orcel didn’t immediately reply to requests for comment.

Orcel, Gallia Face Off in Race to Replace UniCredit CEO Mustier

Whoever takes over as the new UniCredit chief is likely to face a major strategic decision in their first weeks in office: whether to take over trouble lender Banca Monte dei Paschi di Siena SpA from the Italian state and under which conditions. The government has offered incentives from tax relief to protection from legal risk to help land a deal.

The pressure is on Italian lenders in general to expand after Intesa Sanpaolo SpA last year bought smaller rival UBI Banca SpA, increasing its lead in the Italian market over UniCredit and becoming the country’s biggest lender by assets. UniCredit trades at about 0.34 times its tangible book value, compared with 0.70 times at Intesa.

“Whoever will be named as CEO of UniCredit has to hurry in setting a clear strategy and path of growth,” said Fabrizio Bernardi, a Milan-based analyst at Bestinver Sociedad de Valores SA. “Investors need to know what will be the future of the bank.”

French executive Jean Pierre Mustier decided to step down as UniCredit CEO after clashing with the board over strategy, including his opposition to any domestic takeovers. While he was credited with cleaning up the bank’s balance sheet, critics say he disposed of profitable businesses and was unable to transform the turnaround into a growth strategy.

Focus on Deals

For his successor, cross border M&A could also be on the table, as consolidation across the region is being pushed by regulators. UniCredit has substantial businesses outside of Italy, including Austria and Germany.

Orcel, a well-known dealmaker, is getting support from some of UniCredit’s foreign institutional investors and Italian shareholders, including Luxottica founder Leonardo del Vecchio and Fondazione CariVerona, the people said. Those backing him cite his status as a top European deals banker and his understanding of international finance.

Despite that support, his candidacy brings some baggage. He is currently suing Banco Santander SA for about 100 million euros ($122 million), after the Spanish bank backed out of hiring him last year. He also was the architect of Banca Monte dei Paschi di Siena SpA’s troubled acquisition of Antonveneta in 2007, which has dogged the bank ever since.

Gallia has been the chief financial officer of Capitalia, the bank bought by UniCredit in 2007, member of the executive committee of BNP Paribas and CEO of its Italian unit. Three years ago he founded a M&A advisory firm and became senior adviser of Canada’s Brookfield Asset Management.

He’s spent part of his career in Rome, giving him knowledge of state entities. That’s a valuable tool that may help him untangle the political considerations in any potential takeover of Monte Paschi.

©2021 Bloomberg L.P.

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