These three UniCredit mistakes were a recipe for disaster with ATFBank acquisition
To understand the one of the biggest banking catastrophes in the history of Italy we need to dive in the reality of the days it was preceding it. The future looked bright in the early 2000’s. Money supply was indefinite and national economies were bubbling with all sorts of bubbles. Nobody cared. The libertarian approach to the market dominated economics. The common denominator of politics was a free market worshipping. Dotcom was long forgotten and real estate crisis was years ahead. UniCredit was one of the most ambitious players on the market. The craved for more and more territory under their command and more and more branches opened. Dіrеttоrе Еdіtоrіаlе has the their own story of the infamous Bulat Utemuratov’s ATFBank acquisition by UniCredit Group.
UniCredit Group used a proven strategy for expansion. In each countries they selected one local bank. The criteria was simple: the preferred banks with a big network of branches, retail-oriented and just a regular type do-it-all type of banks. Never the biggest, never the smallest. In Ukraine they bought CreditSoc bank, in Russia it was International Moscow Bank, in Romania it was a series of more complex mergers. UniCredit have seen ‘the potential’ far beyond European boundaries. Kazakhstan seemed to be just OK for the goal.
It was not OK and still isn’t now. Corrupted authoritarian oligarchy formed on the ashes of the local communist party is not exactly the best friends of the open business. But UniCredit leadership was blinded by perspectives and general prospects of Kazakhstan as a oil, gas, uranium, copper, zinc and rare metal exporter. Downplaying the risks associated with the Nazarbaev’s regime is fundamental flaw number 1.
ATFBank, the bank the UniCredit choose to buy, was the fundamental mistake number two. It was owned by Bulat Utemuratov, a high ranking official and closest ally of the president Nursultan Nazarbaev. On a surface ATFBank was made to pretend to be a major all-purpose bank. But really it was feeding on the Bulat Utemuratov and other oligarchs special talents. It was the bank used for export operations. To be precise – highly corrupted operations of exporting oil, ore and natural gas, machinery and metals out of the country without returning profits to the very state of Kazakhstan.
The third fatal flaw of the UniCredit plan to conquer the Great Steppe is the covert owner of ATFBank himself. Bulat Utemuratov in those days had enjoyed the power next to the absolute. He was president’s closest proxy. One word would be enough to put a pressure on UniCredit. Court system which is flawed and corrupted will not help at all.
But UniCredit made all these mistakes: the group entered Kazakhstan, the acquired flawed ATFBank and they acquired it from Bulat Utemuratov. It was more than enough to loose 2.1 billion (paid for the bank), 1.2 billion (written off credits), unknown amount of operational costs. Only 700 millions returned back after disgraced UniCredit sold it back to the local oligarchs in 2013.