The banking industry usually has at least one of a particular type of character – the guy whose name is always in the frame for every top job going. It used to be the role occupied by Jamie Dimon, when he was at Bank One. Before that it was John Mack. Right now, it looks like Unicredit’s Jean-Pierre Mustier is the man of the moment. According to credible reports, he was offered the Deutsche Bank job but turned it down. He would surely have been the chief executive of a merged Unicredit/Commerzbank. And much of the credibility of the persistent rumours of a SocGen/Unicredit deal comes from the fact that with an unclear succession plan for Frederic Oudea after the departure of Didier Valet, SG’s former investment banking chief, it is easy to see as a “king across the water”, waiting in Milan until the time comes for him to reclaim his rightful throne.
For the foreseeable future, J-PM (he even has a good set of initials!) is going to be right up there on the executive search firms’ shortlists. So it’s worth having a look at the key episodes from his career to see what we can find out about his management style.
The reason that Mustier lives in Milan rather than Paris today is that he was the executive at SocGen who carried the can for the Jerome Kerviel affair. The Delta One operation where Kerviel built up the positions was meant to report to Mustier, but it had systems which allowed the rogue trader to put fake hedge trades in to conceal his positions, and to report on a net rather than gross basis. Mustier had to step down as head of investment banking, and later left SocGen entirely when he was prosecuted by the AMF for selling SG shares while in possession of non-public information.
That’s a hard way to learn that what you don’t know can hurt you. Given that experience, it’s not surprising that Mustier would have said no to the opportunity to become responsible for Deutsche Bank, given the known problems with its reporting systems. It also might mean that we shouldn’t expect him to be interested in any roles which come up in Australia, until the Big Four Aussie banks have dealt with the compliance culture issues that are being exposed by the Royal Commission.
His current reign as CEO is actually the second time that J-PM has held a senior role at Unicredit. After leaving SG, he got a job as Unicredit’s head of corporate and investment banking, with a mandate to streamline the operations, cut costs and build a credible capital markets capability. He largely did this (although the divisional earnings were of course swamped by corporate loan losses). But after three years, it seems that he got tired of operating in a second tier and non-growth environment and quit, to join the private debt fund Tikehau.
What does this tell us? He’s a graduate of École Polytechnique, from a class which contained lots of highly successful bankers, and he’s ambitious. He’s prepared to fight fires and solve problems, but not indefinitely. We should expect to see him heading for roles in which there’s a clear vision for growth in the long term.
It’s no fun doing an equity capital raise at a 40% discount. Nor is it any fun to sell off twenty billion dollars worth of assets at a price below their likely fair value. That’s why most bank CEOs try to avoid doing either of these things, and to put them off as long as they can. Not J-PM. He launched the Unicredit capital issue within a few months of taking the job, and the NPL sales a year later. Comparing Unicredit’s strategy to that of other big Italian players, it’s really noticeable that Mustier has always chosen to take the pain and move on, rather than to try to hold on and hope things will get better. If he shows up at a bank which has sacred cows to slaughter, or a big problem division that’s historically been too politically sensitive to tackle, you can expect he won’t be slow to get off the mark.
There’s no particular reason to believe that J-PM has any plans to leave Unicredit, other than that people seem to keep offering him jobs. The consolidation rumours are more tangible, although it seems unlikely that any merger will happen until Italian political risk dies down. But somehow, it doesn’t feel like this is a chief executive whose plan is to see out the rest of his career in a mid tier European national champion bank. He’s worth keeping an eye on. He might be your next boss.
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