UniCredit set to appoint Andrea Orcel as CEO - source

Orcel's nomination would mark a return to the top tier of finance for the Italian, who left his senior investment banking role at UBS in 2018 to run Santander, only for the Spanish bank to rescind the offer in a row over pay. The appointment, which has not been confirmed and will be discussed at a board meeting on Wednesday, comes at a crucial time for UniCredit, which has been talking to the Italian government about possibly buying state-owned Monte dei Paschi .

UniCredit is set to name Andrea Orcel as chief executive, a person familiar with the matter said on Tuesday, putting one of Europe's best-known dealmakers at the helm just as the coronavirus crisis is pushing banks to merge. Orcel's nomination would mark a return to the top tier of finance for the Italian, who left his senior investment banking role at UBS in 2018 to run Santander, only for the Spanish bank to rescind the offer in a row over pay.

The appointment, which has not been confirmed and will be discussed at a board meeting on Wednesday, comes at a crucial time for UniCredit, which has been talking to the Italian government about possibly buying state-owned Monte dei Paschi . After rescuing the bank in 2017, Italy must now privatise it and the search for a buyer has become a matter of urgency after the Tuscan lender was given until Jan. 31 to tell the European Central Bank how it plans to plug a capital shortfall.

Italy is hoping to reach an agreement on what to do with Monte dei Paschi (MPS) by April, sources have said. Shares in UniCredit, Italy's second-biggest bank, rose 4.5% following reports of Orcel's nomination, outperforming a 2% rise in the country's banking stock index.

A spokesman for UniCredit did not immediately respond to a request for comment about the potential appointment. Orcel could not immediately be reached for comment. Orcel, 57, emerged as a strong contender in the race to replace UniCredit's Jean Pierre Mustier thanks to backing from some of the bank's international investors and a group of local shareholders led by eyewear magnate Leonardo Del Vecchio.

Mustier, also a former investment banker, said on Nov. 30 he would leave by April at the latest citing disagreements with the bank's board over strategy. The Frenchman, who had prioritised returning cash to shareholders over acquisitions, had set strict terms for considering any MPS transaction. 'WELL REGARDED'

Orcel is well-known at MPS as he advised it to buy Banca Antonveneta for 9 billion euros ($11 billion) in 2007 when he was at Merrill Lynch. The deal stretched the bank's finances on the eve of the financial crisis and contributed to its demise. Two people close to its privatisation process said Orcel was a dealmaker at heart and would weigh the pros and cons of any potential deal.

An Italian Treasury official told Reuters the banker from Rome was "well known and well regarded" inside the ministry and it was open to discussing the MPS deal with the next UniCredit CEO, whoever that might be. Del Vecchio's backing of Orcel has fuelled speculation in financial circles that he may have more ambitious deals in mind than MPS if he becomes UniCredit CEO - such as a tie-up with Mediobanca.

Del Vecchio is the single biggest investor in Mediobanca, has a stake in UniCredit, and is seen as a prominent figure in Italian finance. Earlier in his investment banking career, Orcel also worked on the 1998 merger from which UniCredit was first born.

The head of investment banking at Swiss bank UBS from 2012 to 2018, Orcel was due to crown his dream of becoming a banking chief executive by taking the helm at Santander. But the Spanish lender withdrew its offer after disagreements over Orcel's compensation, leaving him unemployed and prompting the Italian to file a 112 million euro lawsuit.

It was not clear what would happen to the Santander lawsuit if Orcel were to join UniCredit. People familiar with the search process had said Orcel's background in investment banking, like Mustier's, had raised doubts about his suitability, as had the Santander lawsuit.

While running UniCredit would fulfil Orcel's long-held ambition to become a CEO, it would probably be at a fraction of the salary he earned as an investment banker or the package he was eyeing at Santander. With an annual salary including a bonus of 10 million euros, a sign-on bonus of 17 million euros and deferred compensation in the form of shares, Orcel would have become the highest-paid bank CEO in the euro zone if he had joined Santander.

Even before Mustier took a 75% pay cut last year due to the coronavirus pandemic he was one of the lowest paid bank CEOs in Europe, earning 1.2 million euros in 2019.

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