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Two worlds colliding: banking adventurism and new tenets of leadership
A look at the management style of the new UniCredit chief executive Andrea Orcel
Keith Mullin 17 May 2021
Keith Mullin
Keith Mullin

What are the vital qualities demanded today of chief executives in a world emerging from a public health and economic crisis? Many would say they’re qualities that support stakeholder capitalism, i.e., balancing the needs of employees and their families, communities, suppliers and service providers, and public authorities, and moving away from a singular focus on quarterly profits and maximizing shareholder value.

What personal qualities does this call for? Well, they’re qualities more likely to be prevalent in women than in men: people who understand the importance of and have the skill-set and interest in rebuilding and maintaining morale and cohesion amid an environment of continuing fear, anxiety, and uncertainty. People who feel and show compassion; who listen, engage and connect; inspire, empathize and motivate. People who are generous, genuine, collaborative; who empower, show humility and are open-minded.

With this in mind, I got to thinking broadly about banks and how attuned they are, or alternatively how tone-deaf and lacking in emotional intelligence they are likely to be when it comes to reading and acting on these emerging trends. Trends that will persist long past the end of the Covid-19 crisis. Given that these are hardly skills that banking CEOs have exhibited in the past, I’d say it’s going to be a difficult journey.

Not intending unduly to personalize the issue, but take the extensive coverage of (and rather puzzling media adulation for) the new chief executive of UniCredit. Keeping the above qualities in mind, look up Andrea Orcel, or talk to people who have worked with him.

You’ll discover someone described as a “shark of global finance” and an “alpha shark”; someone who is variously described as abrasive, uncompromising, arrogant, brusque, irascible and not averse to screaming at people. Someone who is ultra-competitive, bullying, aggressive, unfeeling, callous, antagonistic, given to vendettas, belligerent, divisive, difficult, not a team player. A deal junkie; the Cristiano Ronaldo of banking.

None of this seems to be a good fit with the principles of Leadership 3.0 – even if the fawning and sycophantic media coverage of Orcel bizarrely portrays the above as positive.

Also, people are also sick of overpaid mega-rich executives earning gigantic multiples of what everyone else does. Orcel is hardly the only banker earning megabucks, but his Google hits are predominantly about money: his 7.5 million euro (US$9.1 million) compensation at UniCredit. His eight-figure demands to be made whole as a result of being classed a bad leaver from UBS hence unable to yank out the gazillions of dollars of unvested treasure. His nine-figure lawsuit against Santander for withdrawing the offer to become its chief executive … because he was demanding too much money.

This sits very badly at a time of mass unemployment, personal and financial distress, food banks being overrun, and dealing with the tragic loss of family and friends. It’s like several worlds colliding with dangerous reputational side-effects. It’s as tough to reconcile these worlds as Orcel’s stated mission is incongruous: to “buy, buy, buy” and ‘lend, lend, lend’ to improve the group’s fortunes; reversing what his predecessor Jean-Pierre Muster achieved during his five years at the helm. Are we at the start of a journey of reckless banking adventurism?

Orcel made a remarkable comment on the first-quarter earnings call on May 6: "With respect to M&A, it is not a purpose in itself,” he said. “But I do see it as an accelerator and a potential improver of our strategic outcome where it is in the best interest of our shareholders and where we have full confidence in our ability to execute.”

It’s remarkable not only because it is hardly evocative of stakeholder capitalism but mainly because M&A clearly is and has always been a purpose in itself for Orcel, the banker whose high-profile career has been defined exclusively by M&A; a career not even dented by the epoch-defining RBS/Santander/Fortis-ABN AMRO catastrophe.

Orcel has been hailed – and hired – as the man to put UniCredit on a path to glory. But hang on: in his message announcing his new group executive committee, Orcel referred to two of the executives he promoted as culture carriers. But carrying what culture? Because in the same message, Orcel announced that he had hired Annie Coleman, a former UBS colleague, to run People & Culture; an expanded human capital function. He specifically praised her experience of culture transformation and said that hiring and retaining best-in-class talent would be a core drive in “developing and embedding our new culture” (my italics and underlining). Something is afoot.

To accommodate Orcel’s narrative, the media has engaged in some remarkable historical revisionism by creating an air of distinct negativity around his predecessor’s tenure, suggesting that slashing the balance sheet, selling multiple businesses and being cautious was a bad thing that hampered UniCredit.

Let’s not forget that when Jean-Pierre Mustier took over as CEO in 2016, UniCredit was a basket case. He offloaded billion after billion of bad loans. He sold businesses, exited countries, restored the group’s capital position and unravelled its Byzantine structure. Restoring profitability has been difficult. But so it has been for the entire European banking construct: it’s what happens when interest rates are at the zero bound or lower. Mustier deserves genuine plaudits for what he achieved.

After a multi-year cycle of shrinkage, UniCredit has now charged Orcel with executing a strategy of phoenix-like regeneration. A few trials await. Let’s see how he deals with government attempts to force a takeover of Monte dei Paschi di Siena to get it off the state’s books.

There’s no doubt that there is work to do in Italy as would-be acquirers circle Italy’s banking sector for targets. Last year’s acquisition of UBI Banca by Intesa Sanpaolo to form Italy’s largest bank wrong-footed UniCredit. Credit Agricole’s acquisition of Credito Valtellinese this year has piled on yet more pressure on UniCredit to act. A UniCredit/Banco BPM in-country merger has been talked for some time. Orcel might feel compelled to move quickly, as a tie-up between BPM and BPER Banca is seen by some as a preferred option.

But will additive domestic deals even raise his interest? Or will Orcel’s drive for glory avert his gaze to something transformational and cross-border? Whatever he does, will he be given the latitude to act as he has always done, or be forced to adapt to the collaborative, consensual and inclusive leadership style I cited at the beginning? This probably won’t support any notion of “succeed or die trying”.

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