NEWSMAKER-Andrea Orcel returns to shake up Italian banking

MILAN, Jan 26 (Reuters) - In 2015, high-flying dealmaker Andrea Orcel declared in an interview that he wanted to be the chief executive of a bank.

But an ill-fated offer to run Santander has left the silver-haired Italian on the sidelines of European finance for more than two years, mired in a legal row with the Spanish bank while the COVID-19 pandemic pummelled the world economy.

The last time Europe was on the verge of an economic crisis, Orcel was at the heart of the action. Back in 2007, he played a central role in a string of bank deals that cemented his reputation as one of the region’s deftest dealmakers.

Now set to be named chief executive of Italy’s second-biggest lender UniCredit, all eyes will be on which deals he does - or doesn’t - want to do.

As global head of Merrill Lynch’s financial institutions team and later global origination, Orcel advised Britain’s Royal Bank of Scotland, Santander and Belgium’s Fortis in the ruinous 71 billion euro ($86 billion) takeover of ABN Amro.

RBS and Fortis were both later nationalised, with the deal in part blamed for their fate as the financial crisis brought banks across the region to their knees.

Before that deal closed, Orcel advised Monte dei Paschi on buying ABN Amro’s Italian business Antonveneta from Santander. The Tuscan bank paid 9 billion euros, even though Antonveneta had been valued at about 6.6 billion euros in the broader ABN Amro deal just months before.

Monte dei Paschi later admitted it had done no due diligence.

By stretching Monte dei Paschi’s finances just as the global financial crisis bit, the Antonveneta deal, coupled with a string of problematic derivative trades and a mountain of bad loans, helped send the world’s oldest bank still in business into a spiral of failure.

The following year, as Europe’s banks battled to survive the crisis, Orcel received a bonus of some $33.8 million.


In 2012, Orcel moved to Swiss bank UBS to run its investment bank. But he kept a close relationship with Monte dei Paschi, earning millions in fees by advising on a series of rights issues and fruitless merger attempts.

Then in 2018 Santander, another close client, came calling and looked set to grant his wish.

The Spanish bank’s executive chairman Ana Botin wanted Orcel to be its next chief executive, surprising many in the European world of finance given his lack of experience in commercial banking.

But when his appointment was announced, Santander still hadn’t come to an agreement with UBS over how to handle about 55 million euros deferred pay Orcel was due to receive in future years from the Swiss bank.

Santander had been hopeful UBS would still pay up. UBS said No.

After months of fruitless haggling, Botin told Orcel the political climate in Spain meant they couldn’t meet his pay demands and the job offer was off.

Botin tried to find ways to come to a friendly agreement, but to no avail. In May last year, Orcel sued Santander for 112 million euros. Delayed by the pandemic, the case was due to be heard later this year, but what will happen now is unclear.

What is clear is that by taking the top job at UniCredit - a bank he helped create in 1998 as a young Merrill Lynch banker working on the merger of Credito Italiano with UniCredito - Orcel will again become central to the fate of Monte dei Paschi.

UniCredit was seen as a frontrunner to be its white knight. With Orcel in charge, a UniCredit deal is likely, but whether it will still involve Monte dei Paschi remains to be seen. ($1 = 0.8222 euros)

Writing by Rachel Armstrong; Editing by David Clarke