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Unicredit elects the new board and installs Andrea Orcel as CEO and Pier Carlo Padoan as president. The 2021 remuneration policy, which includes the maxi-remuneration of 7.5 million euros in favor, passes on the wool thread – with 54.10% of the share capital present and entitled to vote (votes against 42.66%) of Orcel for the first year, despite the contrary opinion of the proxy advisors. The proxy advisors Glass Lewis and ISS had suggested to institutional funds to vote “no” for the de facto transformation of the “variable” part of the salary into “fixed” (and in which case the criteria in force in 2020 would remain, which would have involved a lower salary for Orcel) while large Italian shareholders such as CariVerona (1.8%) and Crt (1.65%) had made it known that they would vote in favor. The bank itself explained in written replies to shareholders that high pay serves to attract talent.
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I voti
The candidates from the slate presented by the outgoing board were elected to the new board, namely Pietro Carlo Padoan, Andrea Orcel, Lamberto Andreotti – also confirmed as deputy chairman -, Elena Carletti, Jayne-Anne Gadhia, Jeffrey Alan Hedberg, Beatriz Ángela Lara Bartolomé, Luca Molinari, Maria Pierdicchi, Renate Wagner and Alexander Wolfgring. The list obtained 76.31% of the shareholders’ votes. Elected for the minorities represented by Assogestioni Francesca Tondi and Vincenzo Cariello, with 22.75% of the votes. The 2020 financial statements have also been approved. The list was therefore voted by more shareholders than those who approved Orcel’s salary. “This vote is to be considered in favor of a new strategy, the list of the Board of Directors and the new CEO, in line with the objective of strengthening UniCredit’s performance in the interest of all shareholders”, commented a spokesperson for the bank.
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The comments of the protagonists
“This bank plays a leading role in the credit landscape and is a truly pan-European institution, whose origins are firmly rooted in Italy, the country where I was born,” Orcel said after his appointment. «I see in UniCredit the opportunity to make a difference. An opportunity to do things differently and create a model of what banking can be like, done in the right way, for the right reasons ».
“My main objective will be to create the best conditions for the bank to generate value for its shareholders and for all its stakeholders,” said Padoan, thanking the outgoing president Cesare Bisoni. Regarding the appointment of Orcel Padoan, he underlined that «Andrea’s experience is in many ways unique, as it combines advisory and guidance functions of some of the most important financial institutions in the world. Its broad strategic management capability across all areas of the banking sector and its track record in managing globally diversified teams will enable us to be able to realize our ambition to better serve our clients and create the conditions for long-term sustainable growth for all our stakeholders “.
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In the assembly
At the meeting there was a large representation of the share capital, approximately 60.47% of the total, in line with past shareholders’ meetings. The meeting was held virtually, with the participation of the common representative of the shareholders who collected the voting proxies. The main shareholders present are Blackrock (5.15%), Capital Research (5%), Allianz (3.1%), Norges Bank (3%), Atic (Abu Dhabi holding, 2%), Delfin (the holding by Leonardo Del Vecchio, 1.9%), and the Cariverona (1.8%) and Crt (1.7%) foundations.
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Testing the banking risk
Orcel’s talent will be tested right away. The bank is expected to enter the extraordinary operations, seen as the way to bridge the gap in Italy with Intesa Sanpaolo. There is the hypothesis MPS, which would bring with it 6 billion dowry, but an operation on Banco Bpm, which would also have a dowry in the form of tax credits (dta), is not discarded. But there is also Unicredit to be redesigned and relaunched on the revenue front.
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“A solid bank”
The starting point will be the one that the outgoing president Cesare Bisoni described in his farewell speech: “Today” Unicredit, “extraordinary bank”, “is solid, enjoys the highest level of capitalization in its history and is adequately equipped to deal with the challenges that the entire banking sector is called to face ». On Orcel Bisoni he said he was «confident that he will be able to guide the bank by facing the challenges that await him in the best possible way. Andrea has a remarkable track record in combining talent and technology in the transformation process of financial organizations in multiple geographical areas ». Bisoni also focused on his successor, Piercarlo Padoan: «I am sure that UniCredit will benefit from his extraordinary experience and his deep knowledge of the European and international context. His entry well in advance of the expiry of my mandate allowed Piercarlo to become aware of the company dynamics and to contribute to the formation of the list currently submitted to the shareholders’ vote ».
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The dividend
There is also a hand extended to shareholders for coupons: “UniCredit has confirmed its dividend policy and planned an extraordinary distribution of capital in the last quarter of the year, should the right conditions reappear and subject to the authorization of the Supervisory Authority », Bisoni reiterated.
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Generali objective: Morgan Stanley’s analysis
Even if “complex” and with “high execution risks”, a merger between Unicredit and Generali “could have industrial rationality” for both, allowing Unicredit in particular to increase exposure to commission income in a context in which the interest margin is affected by the context of very low rates. In a report dedicated to the Italian banking risk, Morgan Stanley, on the day of the appointment of Andrea Orcel at the helm of Unicredit, analyzes the scenario of a marriage between two big Italians. “The potential benefits of such an operation would be the ability to leverage the bank’s customers in Italy, Germany, Austria and the EEC and the potential to develop integrated products and dismantle current distribution agreements to maximize profitability,” analysts write. “The European bancassurance industry is one of the largest and most profitable globally” underlines Morgan Stanley, recalling that “from 2009 to 2018 the growth of the bancassurance channel overtook the other channels in both life and non-life products in Europe and in Italy”.
Morgan Stanley speculates that the combined entity would benefit from capturing the revenues that Unicredit currently shares with its many bancassurance partners, and distribution related costs. But these synergies, expected to be “limited”, would not justify the operation without “the significant capital synergies deriving from the application of the Danish Compromise”, which would allow Cet1 to rise by 3-4 percentage points to 17-18%. With such capital strength, the group could distribute 70% of the 7-8 billion euros of pro-forma profits in dividends and also buy-back, so as to “limit part of the dilution of earnings per share”, which also the merger could generate.
And if Unicredit will “probably” have to give priority to the strengthening of the commercial bank in Italy (a merger with Banco Bpm would present “a solid industrial rationale” for the US bank) and to the revaluation of the share price on the stock market, in the “medium term” a merger with Generali “could represent a key opportunity to gain size, support future investments and improve profitability”.
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