(Bloomberg) -- Philippe Brassac was nearing retirement when a flurry of banking deals in Italy risked throwing his legacy as chief executive officer at Credit Agricole SA into disarray.
UniCredit SpA had made an unsolicited approach on Banco BPM SpA, a move that also triggered the ire of the Italian government. In a decade at the helm, Brassac had made several deals with Rome and struck commercial agreements with both lenders that helped turn Italy into the French bank’s second-largest market. With months left in his tenure, the future of those accords was suddenly in doubt.
In courtesy call late last week, Brassac informed his counterparts at UniCredit and Banco BPM as well as the government that he had quietly taken out swaps to raise Credit Agricole’s stake in Banco BPM. The message was clear: he wouldn’t just stand idly by, he wanted a seat at the table.
For Brassac, safeguarding and perhaps even improving the terms of the commercial agreements is key as he prepares to hand over the reins by the time of the annual shareholder meeting next year. Credit Agricole’s board of directors is expected to announce the name of his successor in the coming weeks.
Credit Agricole wants “to defend its partnership” with Banco BPM, “while keeping its optionality,” Barclays Plc analysts Flora Bocahut and Paola Sabbione wrote in a note.
The move has turned Brassac into a pivotal player in the standoff between UniCredit, Banco BPM and the Italian government over the future of the country’s banking landscape. Rome is trying to encourage the creation of a third large banking group in the wealthy north, with Banco BPM and Banca Monte dei Paschi di Siena SpA seen as likely building blocks. UniCredit’s takeover offer could prevent the emergence of another domestic rival.
Brassac, a graduate of one of France’s elite schools with an advanced diploma in mathematics, spent practically his entire professional life at Credit Agricole. Former President Francois Hollande once called him a “pure product of the French meritocratic system,” having emerged from a modest background. A longtime practitioner of judo, his desk in Montrouge, the Parisian suburb where Credit Agricole is headquartered, has been adorned by a photo of French judo champion Bernard Pariset.
When Brassac took over in 2015, the French bank had already been expanding in Italy for several years, having acquired several regional lenders under his predecessor. The new CEO, who previously headed the federation of regional banks that controls Credit Agricole, doubled down on the strategy, including through the acquisition of Pioneer Global Asset Management from UniCredit for about €3.5 billion.
The milestone purchase, agreed in 2016, propelled Credit Agricole’s asset management arm Amundi SA further into the top ranks of global money managers. It came with a 10-year distribution deal under which UniCredit agreed to sell the French firm’s products to its clients, an accord that has become an important source of revenue for Amundi.
Brassac continued to bet on Italy even in the midst of a banking crisis. In 2017, with the country’s lenders still burdened by a mountain of bad loans, he secured a deal with the Italian national resolution fund to buy three more local lenders. In 2021 he successfully took over Credito Valtellinese SpA, doubling his market share in Lombardy, which includes Milan.
The stake in Banco BPM dates back to 2022, when Credit Agricole sought to expand strategic partnerships with that firm, which at the time were focused on consumer credit. A few months later, the French bank announced the purchase of a majority stake in the Italian lender’s insurance business.
Today, Credit Agricole owns 65% in Vera Assicurazioni, a non-life insurance joint venture with Banco BPM. It also has a 61% stake in Agos Ducato, a consumer credit joint venture with the Italian lender, which owns 39%. In the past, Brassac has reviewed options for the unit with his counterpart, showing interest in buying out the minority investor.
UniCredit CEO Andrea Orcel and Brassac have been trying to schedule a meeting to discuss the Banco BPM situation, Bloomberg has reported. They’re expected to also discuss the sale of minority holdings in Agos Ducato, as well as a potential extension of parts of the distribution contract for Amundi, people familiar with the matter have said.
Raising the stake in Banco BPM will give Brassac leverage in the talks. Credit Agricole for a long time held just below 10% in its Italian partner. It moved to increase the stake to 15% after UniCredit announced its takeover offer.
Italy is the only country, apart from France, where the Credit Agricole is present in all business sectors. Last year, the country accounted for about €4.6 billion, or 18%, of revenue at the publicly traded entity.
Italy is also an important market for Amundi. The asset manager has highlighted its dependence on distribution networks such as UniCredit’s as a key business risk in its annual report.
The stake in Banco BPM “is the main bargaining chip to protect or even enhance Amundi’s distribution agreement with UniCredit,” Delphine Lee, an analysts at JPMorgan Chase & Co., wrote in a note. “The partnerships in consumer finance and insurance” with Banco BPM “also matter but account for a smaller share of Credit Agricole’s earnings in Italy.”
(Adds context on Italian banking market in sixth paragraph.)
