Italian bank chief fired over Libyan row

September 22, 2010
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, MILAN, Sept 22 – The head of Italy\’s biggest bank Unicredit, Alessandro Profumo, was fired from his job following a row over controversial Libyan business connections he had promoted.

Profumo, who led Unicredit since 1997 and built up the bank into a major European player through a massive acquisition programme, stepped down after a four-hour emergency board meeting Tuesday.

The board has "taken the position … that the time for a change of the head of the group has come," a statement said late Tuesday.

"Alessandro Profumo therefore handed in his resignation."

It said Unicredit chairman Dieter Rampl would take charge until a replacement was found "in the coming weeks."

Profumo\’s resignation capped a dramatic day as he was taken to task by Unicredit\’s main shareholders for allowing Libya, a former Italian colony, to build a 7.5 percent stake in the bank without informing them.

In August, Libya granted Unicredit an operating license — believed to be the only such deal with a foreign bank in the key North African oil and gas producer — as it increased its holding.

Reports said Unicredit\’s traditional shareholders as well as chairman Ramp could not forgive Profumo for his handling of the relationship with Libya, now a partner for the West but not so long ago a pariah state, ostracised as a sponsor of terrorism.

"There was a demand made by the board of directors and he resigned," Profumo\’s wife Sabina Ratti was quoted as saying late Tuesday by the news agencies Ansa and Radiocor.

Profumo was chief executive from 1997 and orchestrated a major expansion drive by the bank, particularly into central and eastern Europe. In 2005, the bank merged with German lender HVB which was led at the time by Rampl.

He is also president of the European Banking Federation in Brussels.

Profumo could get a severance package of 40 million euros (53 million dollars), the Ansa news agency said but the bank did not confirm the figure.

Among possible replacements for Profumo, there has been speculation about several names, including Alberto Nagel, head of Mediobanca; Enrico Cucchiani of Allianz Italy and Matteo Arpe, a former head of Capitalia.

The stakes in Unicredit held by the Libyan central bank and the Libyan Investment Authority have risen this year to more than 7.5 percent, making Tripoli the largest single shareholder in the bank.

Tensions were already simmering because of the bank\’s poor earnings, with net profit in 2009 plunging 57.6 percent to 1.70 billion euros while this year it has continued to struggle.

Unicredit was hit badly by the global slump, with some of its newer businesses suffering most in the downturn, prompting criticism of its expansion strategy and then worse still an embarrassing call for state help to get it through the crisis.

In early August, Uncredit said it was planning 4,700 job cuts in Italy between 2011 and 2013 as it re-organised its business, according to union sources.

In early trade Wednesday, Unicredit shares were down 1.26 percent while the Milan market overall was fractionally lower.

Unicredit is one of the biggest banks in Europe. It has a market capitalisation of 37.3 billion euros and around 162,000 employees in 22 countries.

Shareholders include several Italian bank foundations, German insurance giant Allianz and the Aabar Fund from Abu Dhabi, as well as Libya.

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