All the reasons for the clashes between Unicredit and Mustier boards
Here are the reasons for the break in the relationship of trust between the CEO Mustier and the Unicredit board of directors
Mustier has decided to leave Unicredit because the strategy of the Team 23 plan and its founding pillars are no longer in line with the current vision of the board of directors. The relationship between the CEO of Unicredit and the board of directors proceeded at full speed a year ago, when there was the approval of Team 23. "Together we are One Team, One UniCredit", declared Mustier on 3 December of the 2019.
In recent months, however, the situation has changed to the point of no return for three main reasons: the Mustier project, later abandoned, which aimed at creating a subholding in which to incorporate Unicredit's foreign activities to be listed in Frankfurt; the M&A issue and in particular the hypothesis of acquiring Monte dei Paschi di Siena and the performance of the Unicredit stock on the Stock Exchange which has not recovered from its competitors after four years of hard work. Thus, while Unicredit is waiting for a new governance and an update of the strategy, Mediobanca Securities advises to be careful of the French.
THE DECLARATIONS OF MUSTIER THAT LEAVES UNICREDIT
Unicredit CEO Jean Pierre Mustier will leave the bank after five years. The CEO will remain in office until the end of his mandate (April 2021) or until the appointment of a successor to ensure the orderly transition. Over the past few months, Mustier said, “it has emerged that the Team 23 Plan strategy and its founding pillars are no longer in line with the current vision of the Board of Directors. As a result, I made the decision to leave the group at the end of my term in April 2021, in order to allow the Council to define the future strategy ”.
THE TEAM PLAN 23
Team 23 , Unicredit's 2020-2023 strategic plan that was approved on 3 December 2019, is focused on risk reduction and organic growth, two prerequisites aimed at maximizing the creation of value for stakeholders. Team 23, which provides for the waiver of external growth options both in Italy and abroad, aims at a higher remuneration for shareholders. During the period of the Unicredit plan, it estimated that it would generate 16 billion in value for investors through a combination of dividends, share buybacks and an increase in tangible assets. The plan was well received by the entire group, the market and analysts. The objectives of the business plan were in fact in line with the forecasts of the experts and better than expectations in terms of the return to shareholders.
COHESION OF THE BOARD IN 2019
The statements contained in the release of the Team 23 plan clearly showed the cohesion of the entire Board of Directors. A year ago Mustier stated that “thanks to the tireless commitment of all colleagues, we have successfully completed Transform 2019, surpassing the key targets and laying solid foundations for the 2020-2023 strategic plan, Team 23. This shows that we know how achieve the objectives in every macroeconomic context ". The CEO stated that “together we are One Team, One UniCredit and we are committed to doing the right thing and making Team 23”.
THE SUBHOLDING PROJECT BEGINS TO CORRODE RELATIONS BETWEEN CEO AND BOARD
Mustier's project relating to the creation of a subholding in which to incorporate Unicredit's foreign activities to be listed in Frankfurt has begun to corrode relations between the CEO and the Board of Directors. To various administrators and stakeholders, Milano Finanza points out , the project, which arrived twice on the board in draft form, seemed like the prologue of Unicredit's departure from the Italian market. The hypothesis, which had not even won the favor of the government, was frozen, including the important influence of the next president Pier Carlo Padoan (former Minister of Economy) who had joined the board of directors of Unicredit halfway through October 2020.
MPS CREATES DEFINITIVE BREAK BETWEEN CEO AND CDA
In the last board meetings, the clear break that led Mustier to take the decision to leave Unicredit, or the possible acquisition of Monte dei Paschi di Siena by the bank in Piazza Gae Aulenti, emerged.
Mustier's resistance to M&A represented an obstacle to the integration operation between the two banks hoped for by the Ministry of Economy and Finance, the largest shareholder of MPS with a stake of approximately 68%. More generally, Mustier's thought, who remained faithful to the Team 23 plan, represented a brake on extraordinary transactions: in fact, while the CEO of Unicredit remained firm on the "No M&A", other banks have carried out or started to evaluate deals with clear benefits. An example of this is the takeover bid launched by Intesa Sanpaolo on Ubi Banca in February 2020, a move that led the bank headed by the CEO, Carlo Messina, to strengthen nationally.
The Team 23 plan meticulously pursued by Mustier does not appear to be compatible with the M&A theme. Intesa Sanpaolo analysts think that one of the key pillars of the business plan, namely the distribution of capital to shareholders, could be "abandoned or limited" by the new Board of Directors.
THE PERFORMANCE OF UNICREDIT ON THE STOCK EXCHANGE HAS NOT PLAYED IN FAVOR OF MUSTIER
The performance of Unicredit in Piazza Affari seems to have been another element that has increased the divergence between the CEO and the Board of Directors. In fact, Fidentiis points out that “after four years of hard work” Unicredit on the Stock Exchange has not recovered any ground compared to its competitors. For Fidentiis analysts, this could even have been the reason that sparked the 'clash' between the CEO and the Board of Directors, followed by the MPS issue.
MUSTIER'S WORK AFTER THE GREAT RENOVATION
In summary, therefore, there seem to be three main reasons that have cracked the relationship between Mustier and the Board of Directors: the project of the subholding, the M&A and in particular the hypothesis of acquisition of Mps, and the performance of Unicredit on the Stock Exchange. To all this is added another critical aspect. Il Sole24Ore writes that after the major consolidation process of Unicredit at the end of 2016-beginning of 2017 led by Mustier and characterized by the 13 billion euro capital increase and the reduction of the Bank's perimeter through sales, the next phase struggled to take form. Various voices gathered by Sole24Ore have highlighted that management has remained that of a typical crisis phase, marked by a very close monitoring of processes, a painstaking division of responsibilities within a constantly changing organization chart. With the result of having taken responsibility for a large part of the pyramid. Il Messaggero speaks of a managerial structure without a deputy but with seven reports headed by the CEO.
MUSTIER HAS MADE UNICREDIT A SAFE SHIP, BUT NOW THERE IS NO ONE AT THE HELM
After Mustier's farewell, Mediobanca Securities in a report on December 1st speaks of Unicredit as a “safe boat” but which has no one at the helm while a storm is underway. Thus, for analysts, "the vacuum that has been created in the leadership, the good evaluation of the bank in Piazza Gae Aulenti and the solid fundamentals of the credit institute, could induce the strongest players" to try to take control of the Unicredit ship. .
WHAT MEDIOBANCA SAYS ABOUT UNICREDIT
Mediobanca Securities considers Unicredit as “a key strategic option for French banks to enter Germany and to increase access to European companies for CIB (Corporate & Investment Banking) activities”. Thus, although far from obvious, “a similar ending would certainly have ironic and paradoxical connotations: a more fragile Unicredit equals more difficult domestic M&A and greater chances of French control”, concludes MB.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/tutti-i-perche-degli-scazzi-fra-cda-unicredit-e-mustier/ on Wed, 02 Dec 2020 07:10:39 +0000.