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The European Central Bank (ECB) has expressed concerns to UniCredit regarding the frequent turnover of top managers, following a series of changes at Italy's second-largest bank under CEO Andrea Orcel, according to two sources familiar with the situation. Since Orcel took the helm in April 2021, UniCredit has witnessed a succession of key departures. The former UBS investment banker promptly initiated a restructuring of the bank's leadership, appointing new top executives while dismantling a dual head structure.
Although management changes often accompany a new CEO's arrival, the rate of departures at UniCredit has persisted and appears to surpass that of other Italian banks like Intesa Sanpaolo, where the top team has remained stable for approximately a decade. According to one of the sources, who spoke on condition of anonymity due to the confidential nature of the matter, European banking supervisors have highlighted this concern to UniCredit in recent months as part of their routine risk assessments and feedback to banks.
Reuters did not ascertain the specific concerns raised. Both the ECB and UniCredit declined to provide comments. Banking supervisors, responsible for maintaining financial stability, typically express concerns about high turnover in management due to the associated increase in operational risks. Furthermore, frequent personnel changes can complicate the implementation of smooth succession plans, including the challenge of nurturing a pipeline of younger executives prepared to assume greater responsibilities.
Frequent changes in top leadership roles pose a risk of delaying the execution of strategies closely monitored by the ECB, such as the transition to digital banking. Supervisors also prioritize governance and banks' management of unforeseen risks. As part of their annual reviews, supervisors assess how banks are organized and operated, scrutinizing key personnel and functions. This evaluation contributes to the ECB's determination of annual bank-specific capital requirements, reflecting their ability to manage risks effectively.
In December, during its annual evaluation processes, the ECB highlighted the need for banks to prioritize internal governance, noting deficiencies in this area for three out of four institutions.
Unlike UniCredit, its larger competitor Intesa Sanpaolo has maintained a stable top-tier team since CEO Carlo Messina assumed leadership in 2013. While Intesa has recently made some adjustments, such as elevating its deputy CFO to chief financial officer, Messina is gearing up to pursue a new mandate.
UniCredit has witnessed several changes in its leadership ranks under CEO Andrea Orcel. In a recent development, the bank appointed an interim head of legal following the departure of Gianpaolo Alessandro, who served as both legal head and board secretary for a decade.
Moreover, UniCredit named academic Elena Carletti, who had chaired the bank's risk committee for an extended period, as the deputy vice chair of the board after Lamberto Andreotti decided not to seek another board mandate.
Several executives who departed were either hired or promoted by Orcel. Notably, in July 2023, UniCredit appointed a new chief digital officer following the exit of Jingle Pang, a former Ping An executive who assumed the technology chief role under Orcel.
UniCredit has experienced turnover in its chief operating officer position since Orcel's tenure began, with Bart Schlatmann stepping down last year. Schlatmann took over from UniCredit veteran Ranieri de Marchis, who briefly served as COO before departing in May 2022.
Other notable departures include Niccolo Ubertalli, who left in July 2022, a year after assuming responsibility for UniCredit's domestic business. Additionally, an internal memo revealed that Stefano Vecchi, head of UniCredit's Italian private banking and wealth management unit, departed after just 10 months in the role.
Source: Reuters
