In Good Company with Nicolai Tangen - UniCredit CEO: The Future of European Banking, Digital Transformation and Grit

Episode Date: February 4, 2026

What's the biggest challenge facing European banking today? Andrea Orcel, CEO of UniCredit, joins Nicolai Tangen to discuss transformation, scale, and technology's impact on banking. They explore Andrea's strategic moves with Commerzbank and Banco BPM, how AI is transforming everything from consumer loans to credit analysis, and the emerging role of stablecoins in payments. Andrea shares his leadership philosophy rooted in grit and empowerment, revealing how he rebuilt a winning culture across 69,000 employees. Under his leadership, UniCredit's transformation has generated outstanding returns for shareholders. Tune in for an insightful conversation!In Good Company is hosted by Nicolai Tangen, CEO of Norges Bank Investment Management. New full episodes every Wednesday, and don't miss our Highlight episodes every Friday.  The production team for this episode includes Isabelle Karlsson and PLAN-B's Niklas Figenschau Johansen, Sebastian Langvik-Hansen and Pål Huuse. Background research was conducted by Isabelle Karlsson and Sigurd Brekke. Watch the episode on YouTube: Norges Bank Investment Management - YouTubeWant to learn more about the fund? The fund | Norges Bank Investment Management (nbim.no)Follow Nicolai Tangen on LinkedIn: Nicolai Tangen | LinkedInFollow NBIM on LinkedIn: Norges Bank Investment Management: Administrator for bedriftsside | LinkedInFollow NBIM on Instagram: Explore Norges Bank Investment Management on Instagram Hosted on Acast. See acast.com/privacy for more information.

Hi everybody and welcome to In Good Company and today I'm in this particularly good company because I'm here with Andrea O'Sell, who is also called the Ronaldo O'Banking. Now, Andrea has really left his mark on the European banking industry. It's now the helm of Unicredit and just so many exciting things going on in your business and in your life. So warm welcome. Thank you very much. I'm very happy to be here. What is the biggest challenge that the European banking industry is facing? just now? Scale and transformation. I think they combine. Scale because without scale, you don't have enough innovation, you don't have enough ability to invest in technology and in all the things

that you should invest to then transform. And transformation, because we tended to look at legacy banks on one side, fintech on the other side. We looked at them. We didn't consider them. But if you take the next five years, five, seven years, they're going to converge. And therefore, you need to ask yourself, can I offer the same level of client journey, the same level of client experience with the same level of efficiency and beat them on what they don't have, which is the clients that we start with, primary clients. And secondly, the ability to deal with multiple products and complexity. There's been a focus on having a lot of confidence. competition in each country, right? So ideally the competition authorities have wanted to have,

you know, a lot of local competition in each country. Is that changing now? Well, I think local authorities have want local competition and the European Union the competition authorities are looking at that by and large if you get close to 25% market share in every in any area you get blocked. So that is to prevent anyone from reducing that level of competition. I don't think that that is changing. Actually, you have some market Germany is one of them where the market shares are way lower than everybody else. And it's like everything in life, it's a balance. Too much market share, too much size does not support

competition and a good service, etc. Too little market share and too little size prevents you from offering the clients what they want because you're too little. What's the best for clients? What's the best market structure? I think a midpoint. I think for me it's a midpoint where you have enough competition, depending on the market and the client segment, it changes. But I do agree by and large that once you move over 20% market share in any place, you need to start asking yourself if there is enough competition

because competition pushes you to be better. Lack of competition pushes you to sit. So is there now too little competition in Switzerland, for instance, after the merger of EUBS in Credit Suisse? Let's say that some people could argue that. And it depends again on which market segments, because if you take the entire industry, from a retail market standpoint. So individual, I think they are okay, given all the banks that they have. When you start moving on small and meat caps and large caps, so the corporate sector, that level of competition, declines because of how strong UBS with credit facilities.

Do we need stronger banks in Europe to make Europe more competitive? Look, the parallel I always use is if the industry, which we always talk about, is the engine, financial services, banks and capital markets are the gasoline. So now Europe has two things. One, it is trying to transform itself because we have. never been faced with such a challenge in terms of the structure of our industry, the leadership of our products. I mean, if you travel to Spain today or if you travel to Italy, I would say in Spain, it's an extreme, most car dealers from European producers are empty, and most car dealers

from Chinese producers are full. And so this for us is a shock as European because we had the leadership in that. And there are other industry where Germany or Italy or France had the leadership before that we don't have anymore. We need to transform that. In addition to that, if you take Europe in the last 15 years, we've been always lagging growth of US and China. And we need that growth. So in order to do those two things, you need new policies and then you need to finance them. And I think some countries feel that they can finance them as they have done so far through government budgets, but government budgets are not enough. They need the leverage of banks and capital markets and other investors to be able to do that transformation and that financing.

And I do think that at the moment, the environment, the regulation, the framework in which we operate does not allow us to do that. Andrew, not many people work with what they studied at university. At university, you wrote your thesis on hostile takeovers. Yes, I did. And in September 24, you acquired a big stake in Commerce Bank. What was the thinking behind that? The working for all this time in the same thing.

Maybe I'm not as creative as people think. I am one of those very lucky individuals that identified earlier what they love to do. Hostate covers? No, I would say, well, at the beginning, for sure. I used to say that if I wanted to be a bin counter, I would have gone in management, and now I am in management. But at university, I was reading so much about hostile takeovers. and the attacks on Airjjar, Nabisco, or all of these things, that I wanted to do the same thing.

I convinced a professor who was awesome to let me do a thesis on something that in Italy was not even understood. And then I got myself through doing exactly what I wanted. I never regretted it. But in life, you evolve, and then your job evolves, and that's where I am now. On Commerce Bank, I think, lots of questions about that. And usually MNA is viewed like an end on itself.

I think after 35 years of MNA, MNA can be a fantastic tool to strengthen a company to catapult its fervor. But it can also be a doom or a bad thing because you don't do it in a discipline fashion. MNA is a tool to your strategy. Your strategy, decide what it is. You have a vision.

You have a plan. You have a strategy. You're doing it organically. M&A can accelerate it if it fits and if it's done at the right terms. How does Commer's Bank fit into all this? So, let's say, how can I put it? The night before announcing the famous 5% stake that we bought from the German government, it was something that totally fit in our strategy.

Germany, we believe in Germany, Poland, we want to strengthen that everything, from a client standpoint, SMEs, this is our bread and batter across Europe, affluent, bread and batter across Europe. And we felt we had implicit support by the government and implicit support by the then leadership of Commerce Bank. But that changed. In the morning, we woke up to a very different world. I think we were discussing before this call on volatility had changed. And every morning you wake up and you find a different reality, we found a different reality. And at that point, the choice for us, and this is one characteristic of MNA, was one, not go forward, and therefore reverse course.

We felt at the time that that would be an admission that we had done something incorrect and we didn't think we had. Two, stay as is and bob around. Or three, get to the maximum we could get without launching a bid and then sit and see how the situation will be. would map. And we chose the third course. That's exactly what we did between the end of 24 and the end of 25. In my opinion, and in the opinion of my board, it has been a success. Today, that stake will generate close to 800 million euros a year, post-tax, growing, assuming they make their plan. And maybe in an undefined period of time, there will be the, the possibility to convert that into a combination that would make, in my opinion, us the most

truly pan-European bank in Europe, because let's say east of Turin would have market share everywhere in leadership across Germany, Italy, Austria and the sea. But why did the Germans change their mind? I think a number of, you know, I usually have learned in life to focus on what I control and not to speculate on what others do. I would say the following though. I think one of the things that have changed and many things have changed in Europe is we now almost always deal with coalitions. Coalitions are not uniform. This happens in Germany. It happens in Italy. It happens in Spain. I can take almost every country that I am active is. They're coalition. And I would say that the

The part of the government that we were talking to at the time was much more liberal and market-friendly. The rest of the coalition was less. And maybe within the government they were less aligned than one would have thought. And when everything came to bear and there was a lot of noise about it, they took a majority a position that was against the position of what anyone's side had taken vis-à-vis us. And then quite soon afterwards, you launched a bit. for Banco BPM? Yes, we did.

So you're a boxer. Does it make sense to box against two people at the same time? For us, there were two things, or the following consideration. The first consideration is that by the time BPM emerged, we were absolutely convinced that, while we would convert our derivatives and everything else into a 30% stake, we would not launch a bid in Commerce Bank in the foreseeable future. So while there was all the financial planning of getting to 30% and converting the stakes,

there was no integration, nothing industrial, we would just sit on a financial participation. So it wasn't boxing with two, it was boxing with one. And then, so we said if actually, if now we launch BPM, by the time we could, close the transaction and then we integrate it, we will be able to go on the second thing. Because in Italy, differently from Germany, we felt we would, obviously, our evaluation did not come true. We would close the transaction in nine months, integrated in 11, and it was in Italy. This is one of the advantages of unique credit.

We are active in 13 markets for 13 legal entities, 13 boards and 13 in everything. So the Italian leadership team would run, the other 12 markets would not even notice, and sequentially, if the condition were then right, we would be able to box the second boxer, as you call it, in another market, we've another team, we've another framework, and that was possible. So one, it was that. Two, it was frankly shareholders. We could not at least try to participate in Italian consolidation, which is one of our two main markets, if it was going on and just say, well, because I'm busy there, I haven't done that and the market has consolidated away from me. At least we needed to try, and therefore we tried. And so these were the two, and at the time, and we had waited for three and a half years, the terms, the financial terms were aligned. So we could do a transaction, which at the time, even if we reviewed up for premium, we could bring in and look at our shareholder and say, well, strategically, you know it is, because you always wanted me to do it.

And term-wise, it could return on investment 15%, which at the time was about two points above my share by back to adjust for risks, and it would strengthen our business in Italy. So that's why we brought it in. When you look into the future, do we need banks in their current forms? I think as we started with this, banks will morph. So it takes some... Move into what?

Into. So let's say that the business model is changing. The way we do business is changing. Translated in financial terms, maybe 10 years ago you saw a bank, commercial banks, legacy bank, 50% cost income ratio, they're solid, they're good. 12, 13% return on equity, they're solid, they're good. Today, the same terms would be 40. In my opinion, if you, 40% cost income ratio and probably... And just to explain that, that the cost of 40% of your income.

Those mean that cost are 40% of my income. And the return on equity, which was about 12%, I think today you need to have an ambition to be in the high teens. So 17, 18s, et cetera, et cetera. So the industry, if you want to look at it, positively is becoming more appealing. But it requires rethinking how you do things.

You're not sitting back and continuing to operate on the business model you did 50 years ago, 30 years ago, 20 years ago. You need to rethink the organization, the process, the way of working, the technology, the AI, and change and change and change.

So when you then take unique credit and you sit in your chalet and you think about unique credits 10 years from now, just what is, it look like? What is it? Well, if you look at it from a client standpoint, and for a second, let me take individuals, families. I always say that to our people, if you have a session on Netflix or on some other

of those platforms that we're so accustomed to be on. And then for any reason, you need to switch of that and move on your bank. Do you have the same experience? Because if you don't, you will not survive in five years. So the client experience needs to evolve to what now, in many other facets of our life, we consider the requirement, the bar, the expectation. And that requires a complete rethink of the way we operate, especially on the front. Tell us how you're going to change it.

So I think it's block by block. So obviously banks are regulated. I can't just change it. It needs to make sense. The regulator needs to approve it. But for instance, in my opinion, you start, and everybody says they do that, but they don't. The client needs to be at the, you need to flip the organization. That's what we did.

The client needs to really be at the center of everything we do. So when you think about it. the way you do an onboarding of a client when you think about how you grant a loan to a client. You need to start by thinking how will the client react to that. I'll give you a very simple example consumer finance. You're going to shop you want to buy something. At unique credit, if you were not pre-approved and we didn't pre-approved many people, it would take seven days. Is that an effective way to support a client? It's not. Today, It takes 13 minutes if you're not approved before.

And most of our clients are pre-approved before, so it doesn't take 13 minutes. They know their limit, they can spend, and they can go. In order to do that, it means my process, which was 23 steps, needs to become two. My credit models needs to be online all the time to assess the risk of that particular client, segment, et cetera. My product needs to be targeted to what they want,

and I need to be in a position to react that quickly because otherwise I can do it fast, but everything will blow up at the back. In order to do that, the entire thinking of how we do consumer finance has changed top to bottom. It has taken us three years. And the same will apply to mortgages.

Mortgages, for example, you as a client, you don't need an answer in seven minutes, but you do want an answer in a week. If you are really keen to buy a house, you wanna know if you have a financing or not, in a reasonable period of time to move. And I can combine that. Let me see you another one.

I give you a consumer loan seven minutes and I know from where you're spending that you're buying a trip to Egypt. Do I offer you flight insurance, travel insurance in general, do I offer you discount at my clients who are all supermarket chains or whatever, to get, I don't know, boots or the right casual wear.

Can I do that? Because if I can do that, then I have financed your dream and I am suggesting to you other things to close the experience. How will AI change this further? Well, AI changes that accelerating things. So number one, what AI does, and this is what everybody's focused on, is it reduces cost massively. So I'll give you one example.

But are you seeing that already or is it still to come? I think what I would say honestly, certainly for Europe, I'm not in the US. Most banks with very, very, very few exceptions, if any, if you ask that question at the end of 24, they would tell you something about AI, but the reality is it was a curiosity. If you ask them today, or at the end of 25, they all talk about it. They all know it's a big, big critical item. But now the question is how do we harness it? And the first reaction that you see in many cases is, and I read it all the time, I gave

co-pilot to every one of my employees. I sent everybody to a course. I did this. But that AI, while it will make the life of your employee easier, is that changing the way you work and is that transforming and extracting synergies? No. That's what I wanted to say. So now some banks and some are ahead of us, but we're trying to catch up quickly.

So if you look at a credit file, very simple. You're a big company you want to loan from us. I need to gather information from your accounts, from the internet, from a number of sources, create a credit file, all of that data. re-classified into my spreadsheets, and then apply my metrics and tell you if you fit or if you don't. I'm simplifying, but that's that. Usually, it takes six weeks for one experienced credit officer

to do that from zero to the end if all the data is available. We did a pilot together with one of our partners. we developed an AI engine to do the same. It took us one week to develop the engine. And they could do, on one where we had taken six weeks to prefer the fire, they could do it in 14 minutes. We have 98% accuracy. And this is the first trial.

It will become 100% very, very quickly. So what does that tell you? It tells you that if I take the credit process of the bank, 80% if not 90% of the people in the large caps prepare files so what are you going to do because now what

are you eliminating 90% of the people the way of working changes you need to manage the social impact in many countries where I am I cannot do that if I don't reskill them so it's progressive so what do you do and so it's that so for example

we have since 22 end of 22, started a rescuing unit. Usually we have about, well, since then, we've done about 650, 700 people. We're people that are not leaving, but that are good professional, but just their areas are getting disintermediated. So what do you reskilled them to do? To move to other things where we need more of them. I think, for example, in my opinion, banks have curtailed too much the human touch to the client.

So I may want everything online, but if I'm taking a mortgage of 250K, I want to see a person in front of me. So do you think banks generally will not reduce cost as much as people think? I think if you don't, in five or six years, you're not here. Do you get people to change as quickly as you thought they would change? I have been pleasantly surprised at Unicredit. But it is not, you get on a podium, you do a presentation that probably some very intelligent consultant has prepared for you. You pontificate for an hour and then you step off and they're all going to do it. It doesn't work that way.

Firstly, you need to co-op them in realizing that this is going to happen with them or without them. So the choice is, if we do it at the beginning, we have time to reskill you, we have time to change, and we can manage our pace. If you wait to hit the wall, you're all on the street. Because this is happening, one way or the other, it is happening. Once you have that conviction, then how do you manage and over how long, in order to be able to manage at best the balance between being fast enough? But on the other hand, not doing things that trade unions and honestly, society will not allow you to do. So can that be done? I think it can be done.

We have done it again and again at Unicredit. And I find that over time, if you provide alternatives and if you treat people correctly, the outcome is more positive than people expect. Another technology change we are seeing is, of course, stable coins, blockchain and so on. Just how is that going to fit into your business? Well, you know, if you had asked me three years ago, I would have said you, I don't really know. Today, I think we are, I think it is a priority. I think if you look at the modernization of markets, is it, bonds, is it equity, is it contracts for mortgages, is it this?

It's just a change in technology eliminating intermediaries. Blockchain, that's what it is. You need to be at it. And the other thing is, if you're on blockchain, you need a means on payment. And it's either a cryptocurrency, which we only get involved to the extent that our clients want to do it because we are not, we think it's too speculative for a commercial bank. like us. So we support it, but we're not using it. Stable kind is fundamentally because it is a lot more stable. That's why we join a consortium of banks in Europe, Kivalis, to launch stable kind based on euros,

because that's another threat for Europe. At the moment, if you look at stable kind, only US dollar. So that would mean that if you go on blockchain and you need a means of payment, you're risking to be completely, disintermediated by US dollar. And the Americans love stable coin because what is backing them is the dollar and US treasuries. And when will we have a European stable coin? We're aiming to be out with the first stable coin, meaning that it's working, by the third quarter of this year. Okay. What are the any other trends in financial markets which make you nervous or worried? No, I do. I do. think maybe one thing, and we were discussing it at the beginning, if you come from having

lived, let's say, the pre-COVID area, especially in Europe, you're talking stable interest rates and low. You're talking cost of risk, so default which are very low, because interest rates are so low that they are very low. You're talking very limited to no inflation. You're talking, you can look at the next three years and very easily be within one standard deviation in terms of projection. So you budget,

you break down the budget in pieces, you have processes, you tell everybody what to do, and you track that. Today, diametrically opposite. I remember that we did, we launched Unicredit Unlocked in December 2021. Our stock price reacted very positively,

very detailed plan. had taken us nine months to do it. A month later, Russia invaded Ukraine and the entire plan went in the bin. And since then, it's the same. We have interest rates which are volatile, geopolitics that are volatile, technology and AI that are changing the way we work.

All the assumption that we make, we wake up the next morning and they are changing because we see new things that we didn't expect. So now, in my opinion, to run a company to compete, you need to understand what is the general direction of travel and have such a deep understanding across your organization top to bottom of what is your vision, your strategy, your plan, and that direction of travel, that the subteams, be it country or subset in countries, retail, corporates, etc., can constantly at least,

and reject what was the original plan to get to the same direction but adapting to a changing environment. And the style of management is diametrically opposite because you're constantly looking at how they have adjusted and seeing if it's going in the right direction rather than monitoring if they are applying what you thought they would apply at the beginning.

And that adjustment is absolutely critical. And unless the volatility we see around us goes down and I don't think it does, I think this is a complete different way of running things. And if you don't do that, the repercussion are very difficult. But to do that, the level of empowerment, the level of trust, the culture that jails together your individuals, and the understanding of where we're going, why we're going,

and what are the levers that they can use, and the comfort of your institution that if they fail, within staying in the metrics you gave them, it's okay, they just need to flag it, group and start, rather than I'm going to penalize you, is massive. And this is a cultural shift that for banks, which are very sclerotic, is very difficult to do. How important is grit in your life? Very important.

It is probably at the essence of what I have always believed. I think some people, not everybody is equal. Some people are born more gifted than I. and we see that every day. But by and large, I think that in a number of situations, I would say in a majority of situation, people that are at a certain level, maybe not the most talented in the class,

that learn, that fail and learn how to deal with failure. They learn how to learn from failure, how to pick themselves back up, and how to go further. I think we share, I think we share a favorite book, Grit by Angela Duckworth. Absolutely. And we did have Angela Duckworth on the podcast. Oh, you did?

Yeah, so you did. I did you listen to it. I think she's also. Where did you, where did grit start for you? What was your, you didn't have a particularly hard upbringing, right? I mean, you were a middle class kind of guy, right? I, I, well, first of all, I went, I went through the French Lisee. Which is tough, huh?

Still today, the French Lisee is very Cartesian. Sure. And the style of. teaching, I don't know today, but in my times it was very hard. You needed to deserve the place you had at that chair, at that desk. And therefore, it taught you to regroup and do better because otherwise you wouldn't survive that kind of style of teaching. But in general, it suits me why?

Because I believe that the impossible is possible. Somebody told me either the impossible is impossible until it's done, or if it's impossible, be more creative and you will make it possible. And I think human beings are here to improve themselves. And grit is what tells me that I may start behind, but through determination, resilience, consistency, ability to not take a challenge or set back as a disaster. That does not mean you don't react badly, you do.

But then at some point say, right, it happened. Why did it happen? Pull yourself out and start again. You evolve and you become a much better individual in whatever you set your mind to do. And for me, going through this life and thinking, if I'm determined, if I really want it, if I work at it, I will be able to get there with a lot of effort, but I will,

then it's a journey that is worse going through. And that's, for me, it's at the base of a lot of things that I believe. You speak most of the European languages? Not German, but I do Portuguese. My wife is Portuguese. At least I understand that she would tell me that I speak a derivative of Spanish. But I do speak Spanish, I do speak French, Italian, English, and a little bit of Portuguese. What do you, these kind of a kind of pan-European place?

What is it, what is it due to your thinking? It's actually quite interesting and my wife and my daughter always point that out. I still count in French. If there is a mathematical problem or I need to correlate things and I speak loud to hear myself on the logic, it's always French. I do presentation in English because I've been here for 35 years and therefore all my professional life has been that. Maybe I enjoy my life and enjoy communicating in Spanish when I am on holidays.

So they have marked different aspects of my life and they shape what I am altogether. What kind of temperament or psyche do you have? Where is that from? You can probably, you can call it determined, you can call it ambition, you can call it dysfunctional. And for me, In what parts of it is this dysfunctional? So I think for me it's that. So for example, a lot of people kept on asking me,

what about work-life balance? And I think that statement assumes that work is bad and you need something else. And if I am doing the job I chose with the people I like and I am on a journey that is exciting, it's almost like it's not work.

I'm actually enjoying the journey with the people I'm doing it. So I will naturally tilt towards more work. And I do think that also these things move in life. So if you had known me when I was 25, yes, I was working a lot. Today I'm still working a lot. But because I have a daughter who is 15, my priority has moved. So this work-life balance for me,

it's choices. But what is a lot? What is it to work a lot? Well, I think that when I was, I still went through the boot camp of the investment banks in the US when I was 25, where if you weren't doing three all-nighters a week, did not take any holidays in your analyst years and weren't working six, if not seven days a week, it was you were not through the boot camp at the end. I don't think that that's necessarily the right thing to do.

Do you work your people really harder? I think the work your people really hard, I don't believe. What I think is because I worked really hard, I'd rack them. So I think, and if you ask many of them, when they need time, and many times I ask them to take time, I am the first person who will never pick up the phone to call them or to ask for anything. But I do think that if we are on a journey together and we're trying to get there and they see that I am all in, they choose to be all in. Now, you could say, yeah, but by being all in, you're dragging them. I understand that.

So to an extent it is my responsibility to see if some others are going too far and I stop it. But I don't demand people to be at a certain time in the office onto another time. For me, there is a task to be done. We're all doing it together. You're doing this part. I'm doing that part. Let's get it done. Is it important for you to be liked?

To an extent. I think there are you, and especially when you get in more responsible positions or more leadership position, it is very important to keep your feet on the ground and remind you every. day that you're no different. You're just having a different role. But at the same time, and you need to be fair to people because you wield power that they don't have. And you need to really think, which I, what I force myself to do, how would I feel if that was done to me and not dismiss it? So we talked about MNA. M&A takes a completely different meaning in that context. When you are 25 years old and you're doing a spreadsheet, it's numbers.

When you are 62 and you're evaluating what you're going to do with people, it's a completely different thing to do. But I do think that unfortunately life is not fair and unfortunately life is tough. And if you're leading an organization, there are a decision you need to make in the collective interest. And not taking those decisions because not everybody thinks that they are the right decision is wrong. And I do believe, and I have seen it again and again and again,

that even the people who disagree with you prefer that having listened to everybody, you said, right, I listen to everybody this time, this is it, and we're going in that direction. So it's not important for you to be liked. No, not in the way you define it. Then I would love to be liked in many cases. You challenged the establishment in many ways, right? I don't know if you can say that. I would say more that for me, the other thing that is important,

and it happened to be already once. When I am through this job, I want to be in a position to look back and don't have any regret. And that means, have I done everything that I could and I thought right at the time to do the best by my organization or by what it is? And did I leave a better organization as a result?

And so if that means upsetting... I think if we look at your result so far, when you became CEO five years ago, share price was eight, is 70 and you paid seven in dividends. So 10 times. Yes. So that's like totally an outstanding, right?

Yes, but I would tell you one thing. If you look at the team, so the 69,000 people that are unique credit every day, they live and breathe that. Yeah. They are so, it's almost like this gave them back their pride. When they took to clients who say, you know what, thank you because I'm financing my holidays with the dividends. with the dividends that I'm getting from unique credit, they're riveted to have that kind of interaction with the client. So there is an element that is not just performance,

is what that performance mean in terms of achievement both sides. Where did you learn this? Because you've been working at places like Goldman's, PCG, Merrill Lynch, UBS. So tell us where did you learn to make a bank go up 10 times? I think you go back to if you are very focused, if not obsessive, on what does excellence look like and how do I get there, number one. Number two, if you are ready to listen to people who know a lot more than you do, so I arrived

at Unic Credit, I have done, as an advisor, commercial banks for 35, 40 years, but I'm not a commercial banker. I'm an investment banker. Most, if not all, of the good ideas that transform unique credit come from listening to people in the branches and in the trenches in the trenches in general. So I think if you want to achieve excellence and you have a humility to listen to people, and then over time, you can bring that together into, so that means this work with doesn't work, we need to pull it together, this is the strategy we're going to do, you will find

that it's a lot, the process is hard, but the outcome is easier. And the other thing that is very important is that because you went through that process and because the ideas are by and large coming from people who feel that is my idea and I'm seeing it in action, they're embracing it 150% and want to take it on the other side. So I do think that these are generic things that you have. The rest is I tend to, maybe, be a little bit obsessive. I think about banks all the time.

My wife would say that in the first trip we took, we went to Mexico. And before we even went to see Chichenica, I went, I took her to see a branch because they were the most modern at the time to see how they function because I like the industrial makeup on how it goes from the client all the way back.

So it's a number of things. But ultimately, you need to love what you do. You need to have that aspect. in order to get it done. When you make decisions, how much is instinct or pattern recognition and how much is analysis? So I think it's both. I would say the following things. The first thing is maybe that helps. Having witnessed trading for a large period of my life, we used to say that the outstanding

traders are right 55% of their time, not 100, and not 90 and not 80, 55%. but they're very good at cutting their losses on that 45% understanding what was wrong. They cut for loss with discipline. They start again. So that has always defined my view that speed is important. So yes, you need to get as many elements as possible, but there is a point where you need to take the decision

and you will never have 100% all the facts. Is there there? an element of gut feeling, yes, by definition there is. When you are taking decision on thorough but incomplete information, at speed, by definition, there is an element of gut. There is an element of, I would say, I don't know if you want to call it discipline of humility, of saying, I know this may not work,

so let me observe it, and then let me be ready to acknowledge if I made a mistake. I cut it off, I start again, you catch your losses. It's a decision that the boss made, so it cannot be wrong. Because then you dive into a situation that is not good. And I think if you do that again and again and again, by iteration, you get in the right parameter at the right speed. When you compare how you spend your day now compared to, let's say, three and five years ago, how has it changed? I would love to tell you that it has changed.

I think the element that has changed is that I know the people. I work with a lot better. And let's say when I arrived, by definition, I was relatively cold because I was not emotionally invested. I arrived to do a job. Today, I am emotionally invested. What are the implications? The implication of that is positive and negative.

There are certain decisions that I need to force myself to take because I know the consequences and I know the consequence is they have on people. that I know the face off, I know what they do, and I know how they are going to react before it was easier. At the same time, it feeds energy because it feeds into, at least for me, I can't let them down. We need to get that done.

We can get that done. What does it take to get that done? So it gives you an energy and a determination that otherwise you don't have. You are known for spending more time on capital allocation than other CEOs. Tell me about how you think about capital allocation. I would say that I'm known for a lot of things. Most of them are not true. I would say that if you asked my team, I spend most of my time,

let's call it on the industrial side of the business. How do the process work? How do the technology work? how do the way of working work? Can we change the organization to make it better? Why that product rather than that solution, et cetera, et cetera. So I go a lot in the details. So one thing is to ask people who know more than you,

the classic subject matter expert on the branch, risk or whatever. Another thing is to be oblivious. and delegate everything because everything is okay. So I try to understand everything that occurs. It is true, however, that one element that banks, and this comes from my advisory career, have had always underestimated until recently, is that we have cost operational,

and we have cost of equity, with a cost as well. So not factoring in, but my cost of capital is nine, 10, 11 or 12%, or when I started 17, is wrong. And therefore, in the decision that we made, we prioritized the deployment of capital, which is a scarce commodity. It doesn't belong to us. We're entrusted by shareholders on that

into the places where we could extract the best return. It started with that. Then it became, how can I make the places where the returns are lower, better performing, so I can deploy the capital there as well. And therefore, capital allocation became a mantra for driving a business that both grows profitably. Because everybody talks to you about gross or returned.

If you look at the plan we have now, that is no news. What we're saying is we want to be the optimal intersection of gross and distribution. and distribution. To do that, you need to have maximization of profitability. And therefore,

you need to seek a gross but we call it quality, a growth that seeks to defend margin, to go in the places where your comparers don't go for any reason, too complicated.

They don't have the infrastructure. They don't have the knowledge. It's too painful. To create value and find that. And obviously, when we look at it from a financial standpoint, point is what is my cost income ratio in that area?

So how efficient I am? And secondly, how much capital am I using? And is that capital being rewarded above what it costs me or not? We look at that and we rank the businesses. But then we go back on those businesses and we say, how do we run them? Can we change? It's like building a car. A process, step, step, step, step, everything is a step.

can we change that and automate it? People tend to automate. First, you need to redesign the process. Then you need to automate and use AI. How have you redesigned the corpor culture? So this is a big question because I believe that culture is the lynchmen of everything. Everything. You have the right culture.

Eventually, you're going to win. Yeah. So when you came in the first day and you sit down and talk to people, what part of the corporate culture do you think, wow, I think we need to change this? So I would say this. First of all, changing completely corporate culture is very difficult and takes an extremely long period of time. Eventually... How long time does it take?

Changing it dramatically, more than a decade. Because inevitably, to change it, you need to change it, you need to. to purge the people who are not in that culture. And if you have 80,000 people below you, and most of them are not in that culture, it's going to take your long, long, long time. So I don't think you can impose your culture. The way I look at it is you better go in a place

where your way of principal value culture matches. Maybe not 100%, but to a large extent. Otherwise, you're going to have a very difficult time. What did I have in Unicredit? I think I knew Unicredit from before. I think they always stroke me as living and breathing Unic Credit. They adore Unicredit. We say in Italian they wear the Unicredit T-shirts.

When they're at work, when they're not at work, for them it's an element of pride. They are part of that team. Not many institutions are like that. Coming from investment banking, not many institutions or not like that. I have people who have been there 20 years, 25 years, 30 years. And they love to have been there for all that time. Second thing, they used to be the team to beat in the early 2000s. And they were accustomed to be the team to be.

They were fast, innovative, aggressive. They were not maybe, with the benefit of hindsight, it's always easy. they were not harness in a box that prevented them from bringing that aggression and the speed, etc., to things that then converted in problems. But the DNA was a winning DNA. And I felt, looking at the outside, that over the retrenchment that they had to suffer, and to a certain extent I would call them an almost humiliation, to go from the top to the bottom, they still had it in them.

And it was just a question of putting them back in a position to achieve it. So rather than changing the culture, what I did when I arrived is I spent nine months contributing with a small team to interviewing directly or indirectly about 20,000 people, 30,000 people of the 80,000 that we had, try to determine what were the principle and values that made them. tick. Very interesting. Integrity, very many people, I would say an organization that doesn't talk to you about integrity, not very likely. Second, already, ownership for commercial

bank is quite a lot. And thirdly, care. Coming from investment banking, I didn't expect to be there. It was the first most voted tenant that they wanted to have. Because investment banks don't care, you mean? Well, because probably care about your colleagues, care about your clients, care about a lot of things that have to do with the organization, I think investment banks are more individualistic

than a commercial bank like this was. And I think on those pillars, we started saying, okay, so now we are going to have, do we all agree with that vision? Do we all agree with that strategy? Do we all agree with that plan?

Yes. Do you feel passionate? about it, yes. Then we empowered them back. We had a very top-down command and control structure. Now we are probably one of the most empowered bottom-up organization. But in order to do that, they need to believe in the vision, the strategy, and the plan. They need to be harnessed or structured around KPIs that they believe in and they can understand and one culture. So fundamentally, I talked a lot about the subject matter expert in the branch, in risk, etc. They are much better than I am to doing their jobs.

However, I need to understand that when they make the decision, will they have in mind the same concern, principle and value that I have in making them? Because they may be very good, but if they go in the wrong direction, what? How do you control all of that? And so culture is what makes you confident that 95, 98% of the time, you're going to have the right outcome. Is there anybody from outside the world of banking which have inspired you? Any other discipline? Outside the world of banking.

Well, I go back a long way because I am a fan of when I was a child. Maybe that shaped me. A Roman general that was called Scipio, who did the impossible. At 26, he was leading the Roman legions again. against Hannibal's in Spain. And then he went and took back, I don't know how you call it in English, Carthago, I think, and beat Hannibal with his elephants. It was all about strategy, empowerment, taking the best of individual, Esprit de

Corr, and doing the impossible. More recently... Is that how you beaten the other elephants out there? Well, you know, very... So put it this way, you're a Roman infantry with a nice little shield. And you're there and they charge on you with an elephant. And you're told it is possible to withstand the attack. It would be classified as impossible.

But he found a way to do around it. So for me, it was that creativity. I mean, it's suitable because you were actually born in Rome, right? I was born in Rome. Okay. And it's one of the things that. So it's all coming back to that? Yeah, it might.

It might. But in the more, let's say, in the more modern world, I had, let's say, CEO as I was blessed to be an advisor that taught me a lot. Nobody's perfect. I'm not. They were not. But Emilio Botina Santander taught me a lot on humility, striving for improvement all the time, how to galvanize people.

Stanun Digital and Merrill Lynch, meritocracy, empowerment, how to do you. to make people take ownership of things. Then all of them, including me, have made me six. These were sales, you worked with you were an advisor, right? So you had... Stan O'Neill, I was working for him as I was working on Merrill Lynch. Yeah. Emilio, I was an advisor, yes.

Yeah. So you had a unique insight into these people. Now, if you were to just your leadership principles, just the most important ones that you adhered to. So leadership principle, I think there is a quote I like a lot from Admiral McRaven who said if you want to conquer the world or change the world,

start by making your own bed. And he was saying, I don't mind being late for an important meeting if it means I need to finish my own bed. What is he saying in that? He's saying, number one, do small things well

before you have an ambition to do big things well. Small decision, big decision. Second thing that he's saying is this brings you back to as I said at the beginning both feet on the ground humility etc the this leads into whatever organization especially of large people that you have around you you need to listen you need to be part of them you need to spend a lot of

time with the people you lead understand them show that you're not a Martian from out there but you're one of them that you're very value them, explain, listen to what their questions are, get them to guide you on some question that you may have, and be humble enough to accept the challenge, not as an attack on you, but as something that will make you stronger. Then there is, and so these things, I think,

and then realize what we said before, that your job is just one part of the puzzle, or bringing it all together into something that they share, that they share, that they can identify, that they feel passionate about, and then drive them towards excellence. Because of the beginning, the impossibility is this guy is asking too much of me. But then it becomes, wow, you know, first of all, many times what I thought was impossible.

I did. That gets you to rewrite yourself in a way that makes you almost walk on air. And even if you fail, usually you're ahead of the people who just aim to be to a, arrive to the media, no to the possible. Where does your drive come from? Who do you want to show? I think to a large extent, myself, I don't like, contrary to what people believe, public recognition, I like to think of myself, I set an objective, it was very hard,

and you know what, I got there. And I got there, and now I'm going to set another one, and I will get there. For me, it's self-satisfaction to a very large extent. Your mother worked for the UN. You're right. You did your work. In Rome. Has it been important for you to make her proud? Very.

Very. Very important because from a young age, diversity. I was exposed in Rome both because of school, because Rome is the only city in the world where you have embassy and consulate to the Italian state, the UN and the Vatican. So it's full of public servants from every part of the world

and they tend to gravitate to a large extent on international schools the French Lisei was one of them. So diversity of views, diversity of religion, diversity of belief, but we're still good friends. That did shape.

And I was, I grew up in a generation that thought about about openness, attracting people who were different through demonstrating that there was more we could do together, et cetera. So I'm not living very well the world of fracture, separation distances that we have today.

How do you relax? How do we relax? Today, I spend time in order with my wife and daughter or with my dog, or I do sports because it It takes my mind. So we talked before about boxing because while you're doing it, your mind needs to focus on your adversary or you're going to get punched and remind that very quickly, but you need to focus on what you're doing.

But that forces me to completely let go of everything else around me. And that for me is luxury. I don't get to do that very often. And so physical exercise. or endeavors where I need to focus. I love skiing, open air with my family, both on water or on snow. Yeah, this is what I do.

I don't do much more. What do you read? I read from time to time. The last book I recently reread because I read it a long time ago. There is a book by a Spanish author actually called Postergillo who wrote this book about the cursed religions,

which is Cyp invasion of Africa. And obviously, it's a story as well as historical facts. It's very good from an historical standpoint, but it's a story. And it's good to get my mind away from everything else and get absorbed in something completely different. What is your advice to young people? That's always very difficult. Advice to young people, I would be generic.

I would say, number one, take the time to choose the journey, the job, the trajectory that you love, that motivates you, that gets you there. I remember that being in investment banking, which was a choice as you remember that I did because I loved it. People were asking me, first question, when will I make my first million dollar? And my first answer was, if that is why you chose it, very, very hard to get to that point because you need to go through boot camp, there is no money that is going to compensate for that if you don't like it.

So number one, make sure there is not what your friends like, what your parents like, make sure the choice is your choice and you really like what you do. The second thing is choose to do it in organization and with people where you identify. When we're all young, we think that a bank is a bank, a company is a company.

Banks and companies are very, very different. I worked at Goldman Sachs, I worked at Merrill Lynch. Arguably, many, many people would tell you Goldman Sachs is a materially better company than Merrill Lynch was. One went almost bankrupt, the other one didn't. But for my character, Merrill Lynch was better because I

thrived in that environment and at Goldman I didn't that does not mean Goldman is not an exceptional firm and my best friends are still there fantastic but where you do it is very important because that kind of company will

attract people that are with whom you have something in common or not and if you have those two things then the rest is going to to take care of themselves. The other thing is, do have an idea of the direction where you want to go, but don't think it's going to happen the way you think is going to happen,

because careers are not straight line, the jigsawes, and actually the failures are probably as important, not much more important because of what we were saying about grit than the wins. You're satisfied with win, you don't learn anything from wins. You learn a lot about yourself and about what to do better. So if you have those things, and then I would say more recommendation, I hope that the generation that is coming into the ranks today doesn't take no for an answer, does what today seems impossible, which is getting the world to go back to a center that is from which we are going away that I think as a generation, if we don't do something, we're leaving our children in a situation but it's not as good as the one we found when we were their age. Well, Andra, it's very clear that you know where you're going and that you don't

take no for an answer, that you love what you do and you do it with people you light. It's been great having you all. Thank you very much.