Jean Pierre Mustier: UniCredit's dealmaker who sold but balked at buying

By Valentina Za
·4-min read
FILE PHOTO: Unicredit bank CEO Mustier looks on during the shareholders meeting in Rome

By Valentina Za

MILAN (Reuters) - When French Chief Executive Jean Pierre Mustier vacates his office on the 29th floor of UniCredit's shiny tower in Milan, he will leave behind a leaner, less Italian bank.

His replacement is likely to face pressure from the board and beyond to change that.

During his four-year tenure, the 59-year-old former investment banker raised 14.5 billion euros ($17 billion) by selling assets including what were once considered UniCredit's crown jewels, asset managers Pioneer Investments and Fineco.

The disposals, along with a 13 billion euro cash call, plugged a hole in UniCredit's capital and helped it offload 54 billion euros worth of problem loans.

But the praise Mustier drew turning round what had been Italy's biggest bank was matched by expectations that he would use this new financial firepower to bulk up on acquisitions.

He didn't. And it set the stage for a clash over strategy with the board that preceded his decision, announced on Monday, to leave at the end of his term in April -- or as soon as a replacement is found.

When talks on tie-ups with Societe Generale (SocGen) and Commerzbank went nowhere, Mustier opted to return excess capital to shareholders, a strategy thrown off course by the coronavirus crisis and ensuing dividend freeze.

The pandemic added urgency to a wave of consolidation in Italy started by Intesa Sanpaolo's summer takeover of UBI, making Mustier's stance that "mergers are no panacea" look out of step.

Investors now fret UniCredit will take on bailed-out Monte dei Paschi, the problem child of Italian banking whose acquisition UniCredit has been discussing with the Treasury, according to sources.

Buying the Tuscan lender would mark a U-turn for UniCredit.

Under Mustier, the bank shrank its foreign footprint, selling its Polish and Turkish businesses among others, but it also reduced its Italian presence, including offloading a long-held stake in rival Mediobanca.

'RATHER COLD AND DETACHED' Leveraging UniCredit's cross-border presence, Mustier wanted to insulate as much as possible operations in Germany and Austria from the Italy-risk weighing down its domestic business. But strong internal opposition, according to sources, forced him to shelve a plan for a sub-holding company to separate UniCredit's domestic and foreign assets. Shifting the bank's focus abroad pleased investors who welcomed UniCredit's newfound international standards on governance and sustainability. But it stirred criticism at home. "I dealt with Mustier as minister and found him rather cold and detached versus Italy as if the bank weren't somehow part of it," former Industry Minister Carlo Calenda told a television programme on Monday.

He brushed off Mustier's departure with the comment: "I'm not at all sorry."

Quick to drop Italian in favour of his strongly-accented English in public appearances, Mustier had worked at UniCredit between 2011 and 2014 leading the bank's corporate and investment banking (CIB) division. He had honed his finance skills at Societe Generale where he headed the CIB division from 2003, stepping down in 2009 after a rogue trader racked up 4.9 billion euros in losses in a major derivatives scandal. He had joined SocGen in 1987 from university as an equity options trader, moving up to lead the U.S. options business. When drafted by UniCredit, Mustier was working at Tikehau Capital as a London-based partner driving the French investment firm's international expansion. Bankers and former UniCredit executives say his background equipped him for the capital management operations used to pull UniCredit back from the brink when he arrived but were less suited to steering commercial activities back to growth. Struggling to drive revenues from lending with negative interest rates, UniCredit under Mustier was forced to part with fee engines such as Pioneer and Fineco. A share price trading at a 66% discount to book value had weakened Mustier's position internally, people familiar with the matter said, adding his uncompromising nature had done the rest in pushing matters to breaking point. "The truth is that there is no one CEO for all seasons," an Italian banker said.

(Additional reporting by Elvira Pollina; Editing by Edmund Blair)