Italian bank UniCredit turned a few heads when it announced that Andrea Orcel would become its new CEO in April 2021.
Orcel joined the group with an extensive global reputation as an investment banker and with a proven track record as a dealmaker.
What would it mean for UniCredit and its shareholders? Would they be rewarded for years of patience as the group focused on unloading its bad loans?
Orcel kept his counsel for a few months following taking up the position before finally revealing his strategy in December 2021.
Ambitious plans for growth
In his update, Orcel pledged to generate dividends and buyback for shareholders worth at least 16 billion euros ($18 billion) in the next four years. To do this, he has set a target of 10 per cent growth.
He intends to achieve this by streamlining UniCredit’s operations and cutting out extraneous spending on areas such as external consultancy fees.
He also promised to invest in technologies to speed up the group’s digital transformation which should, in time, deliver savings.
After outlining his intentions, shares in the group jumped by 11 per cent, bringing their gain for the year to almost 70 per cent following a challenging 2020.
In subsequent interviews, Orcel pointed out that UniCredit had fared better than many of its competitors through a turbulent period as a result of being diversified. While some parts of the business struggled, others thrived.
A cautious approach to mergers and acquisitions
Orcel joins UniCredit with a reputation as a dealmaker, prompting interest from investors and industry watchers as to how he may deploy these skills in his new role. The answer came at the end of 2021 when Orcel outlined a pragmatic approach to mergers and acquisitions.
While being open to mergers and acquisitions, he has suggested that the criteria for pursuing any deals will be high. Orcel insists that the group is under no pressure to make deals and a priority would be placed on what they are already doing. He states that he will consider any potential deal but it will need to be a good strategic fit and provide real benefits to the group before he’ll consider proceeding.
It’s a measured and serious approach that reflects the current global economic climate, and a determination to build on the current strengths of the business while addressing short fallings.
ESG and the future
Orcel wants UniCredit to step up its commitment to environmental, social and corporate governance (ESG) initiatives. The group intends to set a positive example to other banks and to its own corporate clients, particularly in relation to sustainability. Orcel wants the group to be a pioneer, leading the way for others to follow.
Andrea Orcel’s appointment marks the beginning of a new era for UniCredit and investors will be keen to see how he delivers over the coming years.