External events in 2018 did not give Jean Pierre Mustier, chief executive of UniCredit, much to celebrate by the year end.
Earlier in the year the bank had looked like it was getting ready for a party: capital was raised, transformation in train and governance reformed. Then its home country and key market set itself up for a sovereign debt scare and a bust-up with the EU.
The formation of a populist coalition between the Five Star Movement and Northern League in May and Italy’s subsequent pursuit of a more expansionary budget course in the autumn was by far the biggest short-term challenge UniCredit encountered in 2018.
This will continue to be a concern for investors in the bank in early 2019, thanks to its impact on capital, funding costs and the economy.
Unfortunately, Italy is not the only political and sovereign headache Mustier faces. The lira crisis in summer 2018 weighed heavily on Turkish banks, forcing UniCredit to revaluate its commitment to Yapi Kredi (Turkey’s sixth biggest bank, which it jointly controls with the local Koc Group).