Anyone would think he had been doodling on his blotting pad at Tikehau, the French asset management boutique where he has spent the last 18 months, about what he would do if he could return to UniCredit in triumph (he left in January 2015, having been head of its corporate and investment bank).
In many ways, it’s a great assignment. Mustier has a free hand to clean up the business, and with the share price on its knees, the only way is surely up. Even the whopping rights issue that is widely expected is probably priced in — though even much diminished share prices usually find a way of falling further when capital raisings are announced.
Mustier may feel he has plenty of good senior staff to choose from for recent promotions, but when it comes to the bank’s balance sheet there are no easy wins, only a choice between several painful options.
Cleaning up the bad loans more quickly is obviously a priority, and he has put the brainy TJ Lim in charge of that. But it’s easier said than done.
Raising capital with a rights issue will hurt shareholders, but selling the family silver will hurt the bottom line. FinecoBank and Pekao are both profitable and successful — to some, the best banks in Italy and Poland.
Calling off the deal to merge UniCredit’s Pioneer Investments with Santander Asset Management and considering a sale instead, looks sensible.
As one investor said this week: asset managers generate capital, rather than absorbing it. Most of Europe’s best banks have asset managers, while weaker ones have often sold them.
But if you have to sell something, Pioneer looks a good bet. It’s a mid-sized, well regarded player that could tempt a big US or Asian institution wanting a foothold in Europe.
UniCredit has a better chance of unlocking that value by putting Pioneer on the block in the open market. Even if there is no trade buyer now, equity investors might buy into an IPO on the hopes of one emerging later.
Who can guess what Mustier will do next month?