What will UniCredit look like in the future?




Since the financial crisis in 2008, the global banking sector has undergone massive and rapid change.

It wasn’t only the regulatory and operational failings the crash highlighted that needed to be addressed. The rapid pace of technological development, allied to changing consumer demand, has also been a catalyst for enormous upheavals.

Negotiating these changes has been a challenge for banking executives, with many long-established names failing to make the transition.

Italian bank UniCredit may have roots that stretch back to the earliest days of European banking, but it’s looking firmly to the future.

In April 2021, investment banker and storied dealmaker Andrea Orcel was named the group CEO of Italy’s second-largest commercial bank.

Orcel joined with an impressive track record of previous success, and he was quick to set out ambitious plans for the future.

Ambitious pragmatism

Orcel has identified a range of achievable, yet ambitious, goals for the group, recognising that the current banking environment requires flexibility and ambition as well as sound decision making.

In a statement dated December 2021, Orcel promised to deliver 10 per cent returns and give €16 billion back to shareholders. This will be achieved through a programme of streamlining UniCredit’s operations and cutting fees for consulting services while investing in digital technologies that will ultimately deliver savings.

Secondly, Orcel set out a measured and pragmatic approach to dealmaking. He stated that he would consider spurring growth through mergers and acquisitions, but only if the timing was right. The terms of any deal would also need to meet a range of strict criteria.

In a recent interview titled Banking in Transition for the Thomson Reuters Breakingviews Predictions 2022 series, Orcel said his M&A strategy is not driven by need. “We are under no pressure to do things,” he insisted. “We need to prioritize what we do because we don’t have a never-ending capacity to do M&A,”

Orcel says he’ll consider any potential deal, but if it isn’t a good strategic fit and doesn’t strengthen the franchise he’ll not make a move.

One deal that met all of Orcel’s exacting criteria is the expansion of its ongoing partnership with German insurance giant Allianz in Italy and Germany, as well as several central and eastern European countries.

Integrating Allianz’s digital platform will ultimately allow UniCredit to provide better service to its customers.

He doesn’t expect any major cross-border bank acquisitions to happen in the near future because of the pandemic’s economic impact on Europe and the regulatory complexities currently involved.

ESG at the heart

Orcel wants UniCredit to be a pioneer when it comes to sustainability as he looks to strengthen the group’s 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:

“For us, it is kind of difficult to go to our clients and drive the right behaviours if we cannot point to ours as being an example,” says Orcel.

Orcel has set out an ambitious yet achievable set of goals for UniCredit as it seeks to take a lead on sustainability, becoming a positive force for good, and a bastion of banking stability and measured growth.