Chief executive officer, UniCredito Italiano
Born: February 17, 1957, in Genoa, Italy.
Education: Bocconi University, BA.
Career: Banco Lariano, 1976–1987, branch clerk and manager, then director; McKinsey and Company, 1987–1989, consultant; Bain, Cuneo, and Associates, 1989–1991, consultant; Riunione Adriatica di Sicurta, 1991–1994, general manager of banking; Credito Italiano, 1994, deputy general manager for planning; 1995–1997, deputy CEO; 1997–1998, CEO; UniCredito Italiano, 1998–, CEO.
Awards: European Banker of the Year, Group of 20+1, 2002.
Address: UniCredito Italiano, Piazza Cordusio 2, 20121 Milan, Italy; http://www.credit.it.
■ Alessandro Profumo became one of Europe's top bankers in the late 1990s and continued in that role into the 2000s. After working his way up through jobs at branch banks, consulting firms, and an insurance company, Profumo took over as CEO at Credito Italiano in 1997. The bank soon merged with other institutions to become UniCredito Italiano, and Profumo proceeded to establish his reputation as a rising star in the financial world. In 2002 the Group of 20+1 awarded him its "Banker of the Year" award. He challenged the modus operandi that were traditional in Italian banking circles, relying on a bold and aggressive style rarely seen in the country; his approach helped him transform UniCredito into one of Italy's best banks. At the same time his brash style alienated many other bankers, sometimes leaving Profumo—and by extension UniCredito—isolated and without allies.
Profumo was born in Genoa, Italy, in 1957. He spent much of his childhood in Palermo on the island of Sicily, then
moved to Milan at the age of 19 where he went to work with Banco Lariano at one of its branch outlets. At the same time he attended Milan's prestigious Bocconi University, where he received a degree in economics. Although he humbly told Jo Wrighton of Institutional Investor , "My time at university wasn't so brilliant" (September 2000), Profumo in fact graduated magna cum laude. He then rose through the ranks at Banco Lariano, eventually managing the firm's largest branch and becoming the bank's director within a decade.
In 1987 Profumo went to work for the U.S. management consulting firm McKinsey and Company; two years later he joined Bain, Cuneo, and Associates, a spin-off of McKinsey. With respect to his time at these organizations, Profumo explained to Wrighton, "My consulting period was my equivalent of an MBA. I learned about being flexible and focusing on the big issues rather than wasting time on the small ones" (September 2000). After leaving consulting, Profumo joined the Italian insurance group Riunione Adriatica di Sicurta in 1991, where he spent three years in charge of asset management and banking.
In 1994 Profumo joined Credito Italiano, the previously state-run bank that was privatized by the government in 1993. The bank had been created in 1870, and Credito Italiano thenceforth became known as a lender to government institutions and large industrial groups. After more than a century of existence the bank had also become very inefficient. Profumo began at Credito Italiano as deputy general manager, later moving up to deputy CEO in 1995; by 1997 he had taken the reins as CEO.
Profumo soon set to work revitalizing the inefficient bank. He introduced performance goals and productivity-based incentives—relatively new tactics in the Italian banking world. He also replaced two-thirds of the bank's top management, promoting many younger managers. Cutting such a large number of jobs was a bold move in a country where many still viewed employment as an entitlement. Profumo centralized many back-office operations and shifted employees to front-office sales positions. He also created a wholesale-banking division with operations in asset management and investment banking. The new division did well, by 2000 producing 15 percent of the bank's profits. One investment banker told Institutional Investor , "Profumo understands all the details, which is why he was able to reshape the branch network so successfully" (September 2000).
Profumo boldly confronted the important Italian investment bank Mediobanca in 1998. Mediobanca was led by the 91-year-old Enrico Cuccia, who possessed unrivaled power in Italian banking circles and rarely found either his power or influence challenged. The brash Profumo, however, attempted to take over Banca Commerciale Italiana, a major Mediobanca shareholder. Cuccia successfully blocked Profumo's bid, but the ploy demonstrated that Profumo was not afraid to take on the biggest and most storied Italian banks.
A more successful move in 1998 was Profumo's merger of Credito Italiano with three banks in wealthy regions of northern Italy, increasing his firm's asset base by 60 percent in creating UniCredito Italiano. Yet the merger was not entirely smooth: Profumo soon found himself in a dispute with the charitable foundations of the acquired banks. The foundations had become UniCredito's largest shareholders and demanded to have a majority of the seats on the new bank's board of directors. Profumo insisted that they remain in the minority, as had in fact been outlined in the merger agreement. As a warning that they were serious about their demands, the foundations sold a small stake in UniCredito to the German Deutsche Bank in 1999; while the German bank had acquired less than 1 percent of UniCredito's shares, the move looked like preparation for a takeover bid. However, Profumo successfully kept his bank's stock price high, deterring Deutsche Bank from making such an attempt.
By 2000 Deutsche Bank had sold its share in UniCredito; Profumo had succeeded in avoiding a hostile takeover. He somewhat sarcastically told BusinessWeek , "Perhaps in 10 years, we will buy them" (December 18, 2000). Profumo and the foundations then reached a compromise in which two new board positions were created, with the foundations getting one spot and Profumo choosing for the other. Afterward Profumo downplayed the dispute, telling Wrighton of Institutional Investor , "We got married without having an engagement period. But we soon realized we had the same interest—UniCredito's success" (September 2000).
Another of Profumo's goals was to expand UniCredito's presence throughout the rest of Europe. He attempted the first cross-border European bank merger, though that particular endeavor failed. He did prove able to set up an office in Dublin, Ireland, taking advantage of lower taxes there to establish a European presence. He also met with some success in moving into Central and Eastern Europe. However, UniCredito remained too small to become a major player in European banking circles. In order to solve this problem Profumo aimed to find a domestic partner, which would allow UniCredito to compete with the larger banks. While some of his European plans had to be put on hold, elsewhere Profumo managed to purchase the Boston-based Pioneer Group, a U.S. mutualfund company.
In 1999 UniCredito's board of directors reconfirmed Profumo's status as the CEO of the bank. Despite the occasional problems, such as the tensions with the charitable-foundation shareholders, the board's backing was a reflection of Profumo's successful rise to a position as one of the most respected bankers in Italy and throughout Europe. He was given much credit for turning UniCredito into one of Italy's best-performing banks. UniCredito became fully profitable and efficient under Profumo's leadership; between 1997 and 2000 the bank's net income grew fourfold and its assets doubled. In Institutional Investor the Milan investment banker Paolo Braghiero claimed, "UniCredito is the best positioned, best managed, and most efficient of the traditional Italian banks" (September 2000).
Profumo was by no means a traditional Italian banker. Many colleagues and analysts described him as bold, daring, and aggressive—all of which were rare attributes in Italian financial circles. While these characteristics contributed to Profumo's overall success, they also sometimes left him isolated; his tactics did not win him many friends. With respect to his business, other bankers worried that if they merged with UniCredito, Profumo would simply wrest control away from them.
Profumo was seen as a direct and demanding boss. He demanded measurable financial results from his employees, whereas most Italian bankers relied more on personal relationships. The management consultant Vittorio Terzi informed Wrighton of Institutional Investor , "Profumo is tough. And he's different from the typical Italian banker, who is cautious and diplomatic. He's straightforward, not the type to smile to your face and criticize you behind your back" (September 2000).
Despite Profumo's creating some enemies due to his aggressive style, few denied that he was one of Europe's most successful bankers. Terzi told Wrighton, "Profumo is the most innovative and aggressive banker in the country" (September 2000). The analyst David Serna told BusinessWeek , "Profumo ranks as one of the best European bank managers—among the top five in euroland" (December 18, 2000).
"Alessandro Profumo: Chief Executive, UniCredito," BusinessWeek , June 11, 2001, p. 32.
Ball, Deborah, "Two Men at Opposite Ends of a Deal Show Flood of Changes at Italian Banks," Wall Street Journal , March 24, 1999.
Betts, Paul, "Profumo Reconfirmed as Chief," Financial Times , January 12, 1999.
Edmondson, Gail, "UniCredito: Powerhouse in the Making," BusinessWeek , April 12, 2004, p. 36.
Edmondson, Gail, and David Fairlamb, "An Appetite as Big as Europe," BusinessWeek , December 18, 2000.
Galloni, Alessandra, and Marcus Walker, "The Italian Job: Banker Shakes Up Secretive World of Finance in Milan," Wall Street Journal , July 22, 2003.
Kapner, Fred, "Power Struggle Takes Shine off Profumo," Financial Times , March 18, 2003.
Robinson, Karina, "Smooth Operator Outlines His Ambitions," Banker , June 1, 2002.
Wrighton, Jo, "Profumo at the Rubicon," Institutional Investor , September 2000, p. 139.