By Valentina Za
MILAN (Reuters) - The abrupt resignation of Chief Executive Jean Pierre Mustier sent shares in UniCredit tumbling on Tuesday as it raised the odds the Italian bank would now embark on a tricky takeover of state-backed Monte dei Paschi (MPS).
The French former investment banker, who won respect across the industry for his four-year overhaul of the Italian lender, said late on Monday he would leave at the end of his term in April after clashing with UniCredit's board over strategy.
Mustier, 59, ruled out mergers and acquisitions, setting him at odds with the consolidation fever sweeping Italy's fragmented banking sector, and instead pushed for returning cash to shareholders.
Italy's government has been looking for a buyer for MPS, which the state rescued in 2017, and sources said it had identified UniCredit as the ideal partner.
UniCredit Chairman-elect Pier Carlo Padoan, a former Italian economy minister who oversaw the MPS bailout, and his board would start the search for a new CEO, the bank said in a statement.
By 0945 GMT, shares in UniCredit were down 6%, after tumbling as much as 8%, while shares in MPS climbed 3.6% on speculation that Mustier's exit could facilitate a deal.
"Mustier has been a key supporter of the capital return strategy over M&A," Citi wrote, saying his departure would be seen by investors as "a key risk for UniCredit's role in Italian consolidation, at the expense of capital return/risk profile."
Mustier, who has said tie-ups "were no panacea" for the industry, had been reluctant to take on loss-making MPS which for years has been at the fore of Italy's banking crisis. He set strict terms for a deal in talks with Rome, sources had said.
People familiar with the matter said he also faced increasing discontent over his failure to lift UniCredit's share price and lack of a clear strategy, after a pandemic-driven dividend ban derailed plans to return more cash to shareholders.
Piling pressure on Mustier, Intesa Sanpaolo (MI:ISP) overtook UniCredit in the summer as Italy's No. 1 bank by snapping up peer UBI.
JP Morgan said the successor to Mustier, previously wooed unsuccessfully for a top job at global giant HSBC, would "have big shoes to fill given Mustier's strong track record on cost management and delivering on targets."
But they said a new CEO would benefit from Mustier's revamp of the bank and a stronger balance sheet.
UniCredit is the latest major European bank to announce a CEO departure this year, with Credit Suisse (SIX:CSGN), UBS, ING, Commerzbank (DE:CBKG) and Lloyds (LON:LLOY) all making leadership changes.
Credit Suisse said on Tuesday Lloyds CEO Antonio Horta-Osorio would become its new chairman next year, a day after the British lender said the Portuguese banker was to be replaced by HSBC’s wealth and personal banking head Charlie Nunn.