May 20, 2016 / 6:34 PM / 4 years ago

Unicredit CEO might resign ahead of May 24 board meeting - sources

MILAN (Reuters) - Unicredit’s embattled chief executive Federico Ghizzoni might resign ahead of a board meeting set for May 24, three sources close to some of the bank’s disaffected shareholders said on Friday.

UniCredit bank CEO Federico Ghizzoni waits for a TV interview at the headquarters in Milan, Italy, February 9, 2016. REUTERS/Stefano Rellandini/File Photo

Uncredit, Italy’s largest bank by assets, declined to comment.

“There is a 90 percent probability that Ghizzoni will come to the board meeting having resigned,” said one of the sources, who declined to be named. Another source said Ghizzoni might stay in place until his successor had been found.

All three sources said the situation remained fluid.

Ghizzoni has led UniCredit since 2010, but has faced growing shareholder unhappiness over the bank’s weak share price performance, stretched capital position and low profitability when compared to rival Intesa Sanpaolo (ISP.MI).

Shareholders representing about 15 percent of the bank took a major step this week towards replacing Ghizzoni by asking Chairman Giuseppe Vita to find ways to strengthen the bank’s governance, including possibly replacing the CEO.

Two sources close to the matter said on Friday an extraordinary board meeting on governance issues had been called for May 24. The gathering has not yet been officially confirmed.

Rumours of investor dissatisfaction with Ghizzoni have dogged the bank for months as UniCredit, Italy’s only globally systemically important financial institution, has failed to put to rest worries it may need a capital increase.

The bank’s governance was also called into question over its decision to be the sole guarantor of a risky 1.5 billion euro (£1.2 billion) capital increase at scandal-hit lender Banca Popolare di Vicenza.

In the end, a pool of Italian financial institutions stepped in last month to backstop the capital call.

Pressure grew on Ghizzoni last week after UniCredit reported a dip in its core capital at the end of the first quarter. The stock has lost 43 percent so far this year, underperforming a 36 percent drop in Italian bank stocks .FTIT8300.

However, UniCredit shares rose 7.6 percent on Friday on expectations it would sell stakes it holds in other banks to shore up its capital, reducing the need to issue new shares.

The bank is reviewing its assets and could end up trimming stakes in online broker FinecoBank (FBK.MI), Poland’s Bank Pekao (PEO.WA) and Turkey’s Yapi Kredi (YKBNK.IS), a source with knowledge of the matter told Reuters on Thursday.

UniCredit, whose biggest shareholder is Abu Dhabi sovereign fund Aabar, is also sounding out potential buyers for its payments processing operations, sources familiar with the matter said.

Writing by Crispian Balmer; editing by David Clarke

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