The Ronaldo of Bankers Faces His Ultimate Test

UniCredit SpA, the most international of Italy’s banks, has been a big worry to investors of late. The former chief executive officer’s abrupt resignation after a spat with the board over how UniCredit should grow at home sparked fears about the firm becoming a tool of national politics. A systemically important lender was left potentially leaderless and without a strategy.

By hiring one of Italy’s best-known bankers, Andrea Orcel, to fill the post UniCredit is keen to reassure investors that it’s back in safe hands. But the peace atop UniCredit will be precarious.

Orcel is a career investment banker and master dealmaker, who swerves swiftly from one transaction to the next. The blockbuster mergers he’s negotiated on behalf of clients — and the pay he’s picked up along the way — have earned him the moniker of the Cristiano Ronaldo of bankers (in reference to the Portuguese soccer megastar). The skillset required of him now is altogether different, however. The former head of UBS Group AG’s investment bank is swapping jet-setting for the slow-burning, day-to-day slog of running of a sprawling commercial lender. To succeed, Orcel will need to lead tens of thousands of employees working in more mundane areas of finance through an era of deep industry change.

Crucially, he’ll have to juggle a multitude of challenges unique to UniCredit and the febrile world of Italian banking.

All going well, Orcel will take the reins after a shareholder vote in April. That’s when the entire UniCredit board is up for renewal, creating uncertainty about how the balance of power may change. Meanwhile, he’s still in a legal dispute with Banco Santander SA, which in 2019 rescinded its offer to make him CEO of the giant Spanish bank. It’s an unwelcome distraction, especially if the bitter battle drags on.

As the architect of UniCredit’s creation, few know the bank as well as Orcel does. Decades ago he helped piece it together through a series of mergers, a period that saw the bank expand rapidly in Germany, eastern Europe and Italy. But this lumbered the lender with an unwieldy network of commercial operations. A pile of bad loans left after last decade’s Italian debt crisis forced a reboot.

Luckily for Orcel his predecessor, the Frenchman Jean Pierre Mustier, has done the heavy lifting. By raising capital, exiting businesses and cutting costs, Mustier restored the bank’s balance sheet. By the time the pandemic hit a year ago UniCredit was preparing to return capital to shareholders.

But things have changed recently. The coronavirus has ravaged Italy and its economy, hurting UniCredit’s profitability as souring debt mounts again. The bank’s biggest competitor, Intesa Sanpaolo SpA, swallowed up a rival, thereby extending its lead over UniCredit. Pier Carlo Padoan, a former Italian finance minister, was appointed as incoming chairman. Mustier — who vowed not to engage in M&A — quit after resisting pressure to consider domestic deals.

Clarifying UniCredit’s role in Italian banking consolidation will be one of Orcel’s first tasks. The government needs to find a buyer for Banca Monte dei Paschi di Siena SpA, the hapless lender, which was rescued by the state when Padoan was at the Treasury. Though Italy appears prepared to sweeten a UniCredit takeover of Paschi with tax breaks and guarantees on the target’s large legal liabilities, Mustier’s insistence on better terms was hardly a surprise. No other acquirer has expressed interest.

With Orcel as boss, shareholders must be banking on an astute rainmaker bringing home a good a deal. He is certainly familiar with Paschi’s epic history. Just as the world’s financial markets were starting to unravel in 2007, Orcel advised the bank on its biggest acquisition, a deal it could hardly afford and which helped seal its long demise. In assessing a takeover, Orcel will be balancing the interests of the board, UniCredit shareholders and his own legacy.

With UniCredit’s shares trading at a fraction of its book value and revenue uncertain, Orcel’s strategic insight may be what the bank needs. He’s an ideal negotiator to steer the bank through international consolidation, once conditions for European cross-border deals improve. It will be a task like no other he’s faced in his career.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.

©2021 Bloomberg L.P.

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