UniCredit CEO Dismisses Questions About His Future

MADRID—UniCredit SpA Chief Executive Federico Ghizzoni, facing pressure from board members and shareholders over his leadership performance, brushed aside questions about his future as he launched the Italian bank's expansion into Spain.

"We don't have any tensions inside the group," Mr. Ghizzoni said at a news conference on Monday. "There is nothing dramatic going on." His relationship with the board, he added, "is very transparent, very simple, straightforward."

The board of UniCredit, Italy's largest bank, has scheduled a meeting on Tuesday, a person close to the bank said. People close to the board said on Friday that shareholders and board members were seeking a new CEO for the lender, which suffers from low profitability, a high percentage of bad loans and a sprawling international network that has failed to live up to expectations.

Mr. Ghizzoni, who has been at the helm since 2010, could step down as early as this week, the people said.

Mr. Ghizzoni said he had no confirmation of a board meeting. Asked whether he would resign, Mr. Ghizzoni told journalists, "I am not here to make comments about this subject, but to speak about the opening of the branch."

"We will see in the future, but as far as I am concerned, as you see today, I am Spain," Mr. Ghizzoni added. "So for me is it is business as usual."

However, the bank's expansion into Spain, to open a corporate and investment banking unit, is unusual because it bucks a trend of retrenchment among Europe's major banks.

The unit, which began operating in February, was formally inaugurated on Monday. UniCredit executives said it would target around 60 clients in Spain, including large companies, financial institutions and private-equity firms, when they do business in UniCredit's main markets—Germany, Italy, Austria, and Central and Eastern Europe.

Most of Europe's banks are focused on cutting costs to bolster profitability, which has been eroded as interest rates have fallen below zero. Investors say they generally prefer banks that are streamlining, rather than bulking up.

"We know that in Europe it's not an easy moment," Mr. Ghizzoni said. "But nevertheless we see the business case to start this operation in Spain." Spain's economy is expanding faster than other major European countries, he said.

Spanish bankers say they are surprised that UniCredit has chosen to launch a unit in Spain. The country's dominant lenders in corporate and investment banking have seen volumes and fees decline this year as global markets drag.

Spain's own set of problems have exacerbated those global woes. A rerun of December's parliamentary election has been set for June after political party leaders failed to cobble together a governing coalition. The political and economic uncertainty has discouraged new investment, hurting corporate and investment banking business in Spain.

"Good luck," said one Madrid-based banker when told that UniCredit was launching a new unit in Spain.

Still, some Spanish bankers acknowledge that UniCredit has an advantage over Spain's lenders, which don't have a strong presence in Central and Eastern Europe. If Spanish companies pick up the pace of investments in that region, the bankers said, UniCredit could be well positioned to cater to them.

Write to Giovanni Legorano at [e-mail]

(END) Dow Jones Newswires

May 23, 2016 11:15 ET (15:15 GMT)

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