The CEO of the Italian bank who intends to become the Jamie Damon of Europe

Andrea Ursel made a name for himself by helping banks choose the right moment to pounce on rivals. Last week, a CEO was executed UniCredit the bank hungry for transactions in Italy, its own move on the German Commerzbank.

In preparation for a possible takeover, Unicredit purchased 9% of shares Commerzbank half of them from the German government. His vision: to establish a European banking giant, which can finance people and companies across the continent uniformly and profitably – and help regain the businesses that were lost after being taken over by American rivals, now that Europe’s banking industry is coming out of a difficult decade.

Ursel is a celebrity in European banking circles, with a refined personality and a colorful history of huge bonus payments. His failed move fromUBS Banco Santander in 2019 ended up with a lawsuit in its favor, and with a sour relationship with a Spanish banking dynasty.

Ursel, known for wearing a bright red Gillette vest under his well-tailored suits, made an unexpected comeback and joined Uncredit in 2021. Since then, its stock price has quadrupled.

A full merger between UniCredit and Commerzbank is not certain, but it is an option, Ursel told Bloomberg Television last week. “Europe needs stronger banks,” he noted.

The European Union has connected the economies of more than two dozen countries, but maintains a fragmented banking industry. Unlike the USA, where mega-banks like JPMorgan Chase (led by Jamie Dimon) operate easily across countries, European banks are limited by national interests and rules that make it difficult to transfer capital across borders. The Eurozone crisis in the decade The latter made it difficult for lenders in the region, especially Italy’s big banks.

The outcome of Ursel’s efforts depends, in part, on whether the German government and its regulators view the merger sympathetically. Orsel said that UniCredit was transparent in its communication with them and did not hire bankers to advise him on a quick takeover. Political obstacles have so far stopped other banks from merging, and the only recent major bank mergers have been within the same country, such as UBS’s post-crisis takeover of Credit Suisse last year.

On top of that, last week, in a report written by former European Central Bank President Mario Draghi, who used to work for Ursel on transactions decades ago as a banker at Goldman Sachs, it was said that Europe needs several large banks across the continent. This is to fuel the industry and compete better against the US and China.

“It seems like it’s something that should happen now,” said Cole Smead, managing director and portfolio manager at Smead Capital Management, and a shareholder in Unicredit since 2022. He said Ursel is in the right place at the right time to create a European counterweight to the big American banks.

Investors needed a bailout, Orsel received a huge bonus

As a boy growing up in Rome, Ursel, now 61, dreamed of being on Wall Street. He wrote his academic thesis on a hostile takeover, and in the 1990s and 2000s his career flourished at Merrill Lynch in London, as American-style deals came to Europe.

His elegant demeanor and deep knowledge impressed the managers, but they were preceded by intensive preparation, former colleagues reveal. The long hours he put in and the ambition he displayed also earned him less than sympathetic acquaintances, who described him as volatile at times and too demanding.

At Merrill Lynch, Ursel developed a close relationship with Emilio Botin, who was the head of the Spanish family that controls Santander Bank, and he advised them on deals, including an expansion into the UK in the 2000s. Not all went well: he advised a group including Santander and Royal Bank of Scotland to split Dutch giant ABN Amro in 2007.

The transaction was seen as an example of exaggeration of the market peak in the world of banking, after some of the buyers needed a massive bailout during the financial crisis. Orsel received a bonus of 38 million dollars this year.

After Merrill, he moved to UBS and held various roles including head of the investment bank and UK arm. He encouraged disheartened staff to stay on board during a tumultuous time for the Swiss bank, which was restructuring after its own government bailout.

In 2018, Emilio Botin’s daughter, Anna, knocked on Ursel’s door. She took over as chairman after her father’s death, and at a dinner in New York that summer, she asked Ursel to become Santander’s CEO.

Santander backed off the offer over the winter, saying they could not justify paying €50 million ($55 million) to steal him away from UBS. The transaction was cancelled. Orcel sued Santander for 100 million euros, a risky strategy that many thought could make him toxic to other banks that would consider hiring him.

He spent the day off with his wife and daughter and their husky, Flash, and joked that he rarely gets to spend so much time with them during the work week. The family have homes in Milan and London, and a holiday home in Portugal – his wife’s native country – and are decorated with family photos, contemporary art and a life-size Darth Vader figure.

Ursel won the lawsuit and more than 75 million dollars from Santander.

“Banker of the year in Europe” who made a change in Unicredit

The job offer from UniCredit was another win, and joining in 2021 came at the right time. His predecessor reduced the bank’s value by tens of billions in bad loans, and the rise in interest rates reignited profits.

Several managers – including some Orsel hired himself – left, because they were not satisfied with his style. But he drove changes, cut costs, doubled UniCredit’s physical branch network and sped up decision-making processes. The bank has accumulated a large stock of cash.

At the end of July, Orsel won the coveted Euromoney Banker of the Year award for the rehabilitation of Unicredit. His counterparts in the banking world, including his former boss, UBS CEO Sergio Armotti, who watched the ceremony in London with some former UBS colleagues, came to support (Orsel and Armotti are partners on ski holidays when they attend the annual World Economic Forum in Davos).

The exercise on the shorts that raised the Komertz stock

Not many knew that Unicredit was interested in purchasing a stake in Commerzbank. There was a significant gap between how the market valued Commerzbank shares and how UniCredit valued them. Rumors that the German government was interested in selling some of its shares grew stronger, and Unicredit began quietly scooping up shares from other sellers. He followed advice he had previously given to other bank CEOs: do your homework. Prepare. Attack.

UniCredit already owns Munich-based HypoVereinsbank – a deal Ursel advised on in 2005 that was then heralded as creating the first true European bank. The Italian bank is present in 13 markets including Austria, Romania and Bulgaria, and bought 9% of the Greek Alpha Bank.

When the German government offered to sell Commerzbank shares to investors, interest was down, according to people familiar with the sale. Some investors shorted the shares instead, thinking that the weak demand would cause the price to fall.

Unicredit had other ideas. The bank offered to buy the entire stake at more than the market price. This pressured the short sellers, forced them to buy back shares and resulted in a huge increase in the stock.

Of course, executing a large, cross-border banking transaction in Europe remains a difficult task. Governments and strong unions opposed job losses and branch closures.

“People have been talking about a cross-border banking union in Europe for 25 years,” said Craig Cuban, former head of global equity and capital markets at Bank of America, who worked with Ursel at Merrill Lynch. “The reason it hasn’t happened is that it’s complicated.”

Ben Dammet participated in the writing of the article.