UniCredit’s Andrea Orcel has halved the bank’s bills for outside consultants since he took over as chief executive, cutting at least 75 million euros as part of a strategy to cut costs. its positive charge.
The Italian bank paid more than 150 million euros annually to outside consultants when he took over in April 2021, and that figure has more than halved, people familiar with the matter said.
The biggest drop was in fees paid to many investment banks and consulting firms such as McKinsey and BCG for strategic and operational advice, which has dropped 75% in the past year alone.
These people are currently paid in the millions of euros, with most of the spending going to outside firms related to key audit and compliance services, the people said.
UniCredit declined to comment.
The sudden loss of income has ruffled those with long relationships with the bank, which has raked in tens of millions a year during UniCredit’s troubled decade since the financial and regional debt crisis. euro area.
Along with reducing costs, Orcel’s goal is to eliminate UniCredit’s reliance on external expertise and bring those steering strategies in-house, increasing its autonomy, one of the people said.
The bank will still hire consultants and bankers for specific projects, but on a one-off basis, they added. The money saved was reused to hire staff in the bank’s core retail business in Italy, the people said.
The CEO has also eliminated executive staff at the bank’s headquarters in Milan, known as the company’s central unit. About 1,700 positions were eliminated there, and the same number of customer-facing roles grew in its branch network.
Since taking over, Orcel has exited its underperforming business and commit €1.5 billion in cost cuts in an attempt to improve profitability. It has recently benefited from an increase in European interest rates and raised its forecast for net profit for 2022 to more than 4.8 billion euros.
Orcel has made higher capital returns for investors a key pillar of its strategy. Last year, the bank announced 3.75 billion euros through dividends and buybacks of its own shares. The stock is up 10 percent over the past year.
However, he has clashed with the European Central Bank over plans to significantly increase payouts to shareholders this year, pledging a total of €16 billion by the end of 2024. The ECB fears this could could deplete UniCredit’s capital buffer as Europe prepares for a potential recession.
There is also tension with the ECB over UniCredit’s delay in leaving Russia, despite sanctions imposed on the country after it invaded Ukraine last February. It has a capital of 2.4 billion euros for the country.
Orcel was set to become Santander’s CEO in 2018, but fell out with president Ana Botín, who withdrew the offer. The Italian player received compensation worth tens of millions of euros after suing the Spanish bank.
The UniCredit Board of Directors is reviewing the structure and size of the Orcel’s Salary Bonus Package