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How politics trumped investor pragmatism at UniCredit – Financial Times

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The optics are awful. Italy’s former finance minister, and the member of parliament for the Tuscan city of Siena, is appointed chairman designate of UniCredit, the country’s second-biggest bank. Within a matter of weeks, a respected chief executive is squeezed out of his job amid suggestions that UniCredit should rescue the busted-flush bank, Monte dei Paschi, Siena’s biggest employer.

When the widely-lauded, but apparently obstructive, Jean Pierre Mustier parted ways with UniCredit last week, it looked like the bank was putting Italian interests ahead of those of shareholders. No wonder investors took fright, sending down UniCredit’s stock price by 13 per cent over two days as the news emerged.

The scenario is not unique to Italian finance: it reflects the kind of inward-looking versus outward-looking tensions that are playing out the world over — from the US presidential election to Brexit, as well as in corporate board rooms. Credit Suisse went the opposite direction from UniCredit by choosing António Horta-Osório, a Portuguese banker who has led the UK’s Lloyds bank for a decade, as its next chairman. But it is telling that in Brexit Britain, Mr Horta-Osório will himself be replaced by a Brit.

Such narratives are of course simplistic. In UniCredit’s case, the reality is certainly subtler — although perhaps no more reassuring for investors.

UniCredit has long operated in a difficult domestic market, plagued by bad debts and an anaemic economy even before the tribulations of Covid-19. Seeking to diminish its reliance on Italy, it has cast itself instead as a pan-European lender. Two deeds stand out: the 2005 acquisition of Germany’s HVB; and the 2016 appointment of Mr Mustier, a high-flying French banker keen to redeem his reputation after overseeing a rogue trading incident at Société Générale. They combined explosively last week.

The landmine that produced the blow-up was laid a year ago, when the single-minded CEO announced in a new strategic plan that the bank would “keep working on a project” to set up a holding company in Germany. The idea was not new, conceived earlier as a mechanism to calm German political unease about UniCredit’s pitch to acquire Frankfurt-based Commerzbank.

That deal went nowhere but the idea of establishing a German holding company, centred on the old HVB business, had evidently been kept alive. It would bring one notable benefit: funding costs for issuing debt and regulatory capital through a German entity would be cheaper and more stable than using the core Italian group. Hence the appearance of the holding company project in the strategy document.

But the plan soon began to fester, as UniCredit’s 14-member board (10 Italians, plus Mr Mustier, an Austrian, an Argentine and an Emirati) became increasingly peeved with a move that would dilute the bank’s Italianness.

When chairman designate Pier Carlo Padoan had to choose between a CEO popular with shareholders and a board that Mr Mustier had complained was weak and too narrow-mindedly Italian, he chose the latter.

Despite the optics, this was never really about bailing out Monte dei Paschi di Siena or not. Both Mr Mustier and Mr Padoan insist they had deemed a deal acceptable, though only if there was no capital cost and legal guarantees were in place to protect the new owner.

But it was about how Italian UniCredit should be. In the eyes of Mr Padoan — and the broader board — it was dangerous to countenance a new structure that could have prefigured a wholesale breakaway from the Milan-based group.

For the new chairman, an economist and politician who has spent much of his career at the heart of the European project, the notion of restructuring an Italian bank into one with a German holding company would clash with the essence of eurozone banking union. In particular, it would undermine the central aspiration — still a pipe dream — that, all else being equal, the market should view the debt of an Italian, German or any other eurozone issuer on a par.

By scotching the plan for a German holding company, Mr Padoan has clearly put the political interests of Italo-European idealism ahead of the pragmatic interests of shareholders. To his credit, he is keen to strengthen and further internationalise the board. But as headhunters search for Mr Mustier’s successor, one bet looks safe: the new CEO will be Italian.

Patrick.Jenkins@FT.com

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Youri Chassin quits CAQ to sit as Independent, second member to leave this month

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Quebec legislature member Youri Chassin has announced he’s leaving the Coalition Avenir Québec government to sit as an Independent.

He announced the decision shortly after writing an open letter criticizing Premier François Legault’s government for abandoning its principles of smaller government.

In the letter published in Le Journal de Montréal and Le Journal de Québec, Chassin accused the party of falling back on what he called the old formula of throwing money at problems instead of looking to do things differently.

Chassin says public services are more fragile than ever, despite rising spending that pushed the province to a record $11-billion deficit projected in the last budget.

He is the second CAQ member to leave the party in a little more than one week, after economy and energy minister Pierre Fitzgibbon announced Sept. 4 he would leave because he lost motivation to do his job.

Chassin says he has no intention of joining another party and will instead sit as an Independent until the end of his term.

He has represented the Saint-Jérôme riding since the CAQ rose to power in 2018, but has not served in cabinet.

This report by The Canadian Press was first published Sept. 12, 2024.

The Canadian Press. All rights reserved.

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‘I’m not going to listen to you’: Singh responds to Poilievre’s vote challenge

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MONTREAL – NDP Leader Jagmeet Singh says he will not be taking advice from Pierre Poilievre after the Conservative leader challenged him to bring down government.

“I say directly to Pierre Poilievre: I’m not going to listen to you,” said Singh on Wednesday, accusing Poilievre of wanting to take away dental-care coverage from Canadians, among other things.

“I’m not going to listen to your advice. You want to destroy people’s lives, I want to build up a brighter future.”

Earlier in the day, Poilievre challenged Singh to commit to voting non-confidence in the government, saying his party will force a vote in the House of Commons “at the earliest possibly opportunity.”

“I’m asking Jagmeet Singh and the NDP to commit unequivocally before Monday’s byelections: will they vote non-confidence to bring down the costly coalition and trigger a carbon tax election, or will Jagmeet Singh sell out Canadians again?” Poilievre said.

“It’s put up or shut up time for the NDP.”

While Singh rejected the idea he would ever listen to Poilievre, he did not say how the NDP would vote on a non-confidence motion.

“I’ve said on any vote, we’re going to look at the vote and we’ll make our decision. I’m not going to say our decision ahead of time,” he said.

Singh’s top adviser said on Tuesday the NDP leader is not particularly eager to trigger an election, even as the Conservatives challenge him to do just that.

Anne McGrath, Singh’s principal secretary, says there will be more volatility in Parliament and the odds of an early election have risen.

“I don’t think he is anxious to launch one, or chomping at the bit to have one, but it can happen,” she said in an interview.

New Democrat MPs are in a second day of meetings in Montreal as they nail down a plan for how to navigate the minority Parliament this fall.

The caucus retreat comes one week after Singh announced the party has left the supply-and-confidence agreement with the governing Liberals.

It’s also taking place in the very city where New Democrats are hoping to pick up a seat on Monday, when voters go to the polls in Montreal’s LaSalle—Émard—Verdun. A second byelection is being held that day in the Winnipeg riding of Elmwood—Transcona, where the NDP is hoping to hold onto a seat the Conservatives are also vying for.

While New Democrats are seeking to distance themselves from the Liberals, they don’t appear ready to trigger a general election.

Singh signalled on Tuesday that he will have more to say Wednesday about the party’s strategy for the upcoming sitting.

He is hoping to convince Canadians that his party can defeat the federal Conservatives, who have been riding high in the polls over the last year.

Singh has attacked Poilievre as someone who would bring back Harper-style cuts to programs that Canadians rely on, including the national dental-care program that was part of the supply-and-confidence agreement.

The Canadian Press has asked Poilievre’s office whether the Conservative leader intends to keep the program in place, if he forms government after the next election.

With the return of Parliament just days away, the NDP is also keeping in mind how other parties will look to capitalize on the new makeup of the House of Commons.

The Bloc Québécois has already indicated that it’s written up a list of demands for the Liberals in exchange for support on votes.

The next federal election must take place by October 2025 at the latest.

This report by The Canadian Press was first published Sept. 11, 2024.

The Canadian Press. All rights reserved.

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Social media comments blocked: Montreal mayor says she won’t accept vulgar slurs

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Montreal Mayor Valérie Plante is defending her decision to turn off comments on her social media accounts — with an announcement on social media.

She posted screenshots to X this morning of vulgar names she’s been called on the platform, and says comments on her posts for months have been dominated by insults, to the point that she decided to block them.

Montreal’s Opposition leader and the Canadian Civil Liberties Association have criticized Plante for limiting freedom of expression by restricting comments on her X and Instagram accounts.

They say elected officials who use social media should be willing to hear from constituents on those platforms.

However, Plante says some people may believe there is a fundamental right to call someone offensive names and to normalize violence online, but she disagrees.

Her statement on X is closed to comments.

This report by The Canadian Press was first published Sept. 11, 2024.

The Canadian Press. All rights reserved.

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