Unicredit CEO defends job in boardroom showdown provoked by political party over Libyan stake

Unicredit CEO Profumo fights for job

MILAN — Unicredit CEO Alessandro Profumo was battling for his job on Tuesday after losing support from a key shareholder, in what some say is turning into a political battle for control of Italy’s largest bank.

Profumo was seen leaving the bank’s Milan headquarters ahead of an emergency board meeting in the evening, and analysts say he may announce his resignation.

“The bank is officially denying reports of a resignation,” spokeswoman Paola Di Raimondo said before the meeting was set to begin.

A Unicredit Group foundation, which counts members of the right-wing Northern League party on the board, have expressed reservations about Libya’s growing role as a shareholder, bringing what has been for weeks a media-fueled confrontation to a boardroom showdown.

The Libyan Investment Authority took a 2.6 stake this summer, while the Central Bank of Libya already owns nearly 5 percent, giving Libyan investors over 7 percent in the bank.

“UCG’s foundations … fear this can make them less powerful, and eventually lose their steering role in the bank,” Evo Securities analyst Fabrizio Bernardi said in a note. “This is firing new speculation about changes in the management line that surely do not help the operating business of a bank already weakened by a tough economic cycle.”

Celent analyst Enrico Camerinelli said the standoff was not over Profumo’s ability to run the company, but over political control of a major banking institution.

“It has a lot to do with the political situation in Italy. The Northern League wants to have control over northern Italian banks,” Camerinelli said.

Verona Mayor Flavio Tosi, the foundation member who has been one of the most vocal critics of Profumo’s leadership, told reporters that other shareholders have the same concerns about Libya’s role in the bank. The city of Verona is the largest shareholder of the Cariverona Foundation, Unicredit’s fourth largest investor.

“It seems to me, reading the media reports, that our worries are shared by other members,” Tosi was quoted as saying by the news agency ANSA.

Tosi also has accused the bank of focusing on business abroad at the expense of Italian enterprises that still need help recovering from the world economic crisis.

Profumo earlier this month told foreign journalists that a Libyan sovereign fund acted on its own to take a stake in the bank and that the move was not solicited.

“These gentlemen made the decision in full autonomy to increase their stake,” Profumo said in an interview with foreign journalists. “They bought the shares on the market.”

If the Northern League-backed shareholders are successful in forcing Profumo out, it would raise the worrying prospect of politicians trying to reassert control over the Italian bank system, journalist Orazio Carabini wrote in an editorial in the daily Il Sole-24 Ore.

“Profumo is fighting a war of independence,” Carabini said.

Italy and Libya have deep economic ties, including oil giant Eni which has invested heavily in the northern African country. Libya’s increased stake in Unicredit came this summer just as Libyan leader Moammar Ghadhafi met in Rome with Silvio Berlusconi in a gala event that included a busload of young Italian women and a review of 130 Carabinieri horsemen. Profumo attended a gathering on the grounds of a Carabinieri barracks.

Unicredit was recently awarded the first international license to operate in Libya.

Profumo, 53, has headed the bank for 13 years. He has led it through an enormous expansion, moving eastward with the 2005 acquisition of Munich-based HvB and growing its Italian business with the purchase of Capitalia.