The suave Italian banker who wants to be the Jamie Dimon of Europe

Teeing up a possible takeover, UniCredit bought 9% of Commerzbank’s shares, half of them from the German government. His vision: build a European champion, capable of financing people and companies across the region seamlessly and profitably—and take back business lost to American rivals as Europe’s banking industry emerges from a dire decade.

Orcel is a celebrity in European banking circles, with a suave personality and colorful history of big pay days. His botched job move from UBS to Banco Santander in 2019 ended with a lawsuit in his favor and a soured relationship with a Spanish banking dynasty.

Known for wearing a bright red gilet under his well-fitted suits, Orcel made an unexpected comeback joining UniCredit in 2021 and oversaw a quadrupling in its share price.

A full merger between UniCredit and Commerzbank isn’t a certainty, but it is an option, Orcel told Bloomberg Television Thursday. “Europe needs stronger banks,” he said.

The European Union has stitched together the economies of more than two dozen nations, but retains a Balkanized banking industry. Unlike the U.S., where megabanks like JPMorgan Chase easily operate across state lines, European banks are hemmed in by national interests and rules that make moving capital across borders difficult. The eurozone crisis last decade hobbled the region’s lenders, especially Italy’s big banks.

The outcome of Orcel’s efforts depends on the German government and regulators warming to a merger, among other factors. Orcel said UniCredit has been transparent with both and hasn’t hired bankers to advise on any rapid-fire takeover. Political hurdles have stopped other banks from combining, and the only recent mergers of large banks have been in-country, such as UBS’s crisis takeover of Credit Suisse last year.

Also last week, former European Central Bank President Mario Draghi, who used to sometimes work with Orcel on deals decades ago as a Goldman Sachs banker, said in a report that Europe needs some large banks spanning the continent, to fuel industry and better compete with the U.S. and China.

“The stars are aligning on this,” said Cole Smead, CEO and portfolio manager at Smead Capital Management, and a UniCredit shareholder since 2022. He said Orcel is in the right place at the right time to create a European counterweight to the biggest American banks.

As a teenager growing up in Rome, Orcel, now 61 years old, dreamed of being on Wall Street. He wrote his undergraduate dissertation on hostile takeovers and flourished in the 1990s and 2000s at Merrill Lynch in London as U.S.-style dealmaking came to Europe.

His urbane demeanor and deep knowledge impressed executives, but was the result of intense preparation, former colleagues say. The long hours and drive earned him detractors, too, who have described him as sometimes-volatile and overly demanding.

At Merrill, Orcel developed a close relationship with Emilio Botín, patriarch of the Spanish family in charge at Santander, which he advised on deals including a U.K. expansion in the 2000s. Not all went well: He advised a group including Santander and Royal Bank of Scotland to carve up Dutch giant ABN Amro in 2007.

The deal was seen as the exemplar of peak-of-the-market excess in the banking world after some of the buyers required massive bailouts in the financial crisis. Orcel collected a $38 million bonus for the year.

After Merrill, he went to UBS and held roles including heading its investment bank and U.K. arm. He encouraged demoralized staff to stay onboard in a tumultuous time for the Swiss bank, which was restructuring after its own government bailout.

In 2018, Emilio Botín’s daughter, Ana, came knocking. She had ascended to chairman after her father’s death and over dinner in New York City that summer asked Orcel to be Santander CEO.

The offer fell apart over the winter, when Santander said it couldn’t justify paying 50 million euros ($55 million) to pry him from UBS. It rescinded the deal. Orcel sued Santander for €100 million, a risky strategy that many thought might make him toxic for another bank to hire.

He spent the time off with his wife and daughter and their husky, named Flash, and joked that he had rarely gotten to see them so much during the workweek. The family have homes in Milan and in London, and a getaway in Portugal—where his wife is from—decorated with family photos, contemporary art and a life-size Darth Vader figure.

Orcel won the lawsuit and more than $75 million from Santander.

The job offer from UniCredit was another vindication, and joining in 2021 was opportune. His predecessor had shed tens of billions in bad loans and rising interest rates were reigniting profits.

Some executives—including some Orcel hired himself—left, unhappy with his style. But he pushed through changes, slashed costs, doubled down on UniCredit’s physical branch network and sped up decision-making. The bank amassed a bulging store of cash.

In late July, Orcel won a coveted Euromoney Banker of the Year award for reviving UniCredit, with peers including former boss, UBS CEO Sergio Ermotti, watching at the ceremony in London and some other former UBS colleagues going in for hugs. (Orcel and Ermotti are ski partners when they attend the annual World Economic Forum in Davos.)

Unknown to most, UniCredit was eyeing a stake in Commerzbank. A yawning gap had opened between how the market valued Commerzbank’s shares compared with UniCredit’s. Rumors that Germany’s government was looking to sell part of its stake had grown, and UniCredit quietly began to scoop up shares from other sellers. He was following advice he had long given other bank CEOs: Do your homework. Be ready. Attack.

UniCredit already owns Munich-based HypoVereinsbank—a deal Orcel advised on in 2005, heralded then as creating the first truly European bank. The Italian lender is in 13 markets including Austria, Romania and Bulgaria, and bought 9% of Greece’s Alpha Bank.

When the German government offered to sell Commerzbank shares to investors on Tuesday, interest was muted, according to people familiar with the sale. Some investors shorted the shares instead, figuring the weak demand would cause the price to fall.

UniCredit had other ideas. It offered to buy the whole block of shares for more than the market price. This squeezed the short sellers, forcing them to buy back shares and igniting a mighty rally in the stock.

To be sure, executing a large cross-border banking deal in Europe remains a tall order. Governments and powerful unions have resisted the likely job losses and branch closures.

“People have been talking about cross border banking consolidation in Europe for 25 years,” said Craig Coben, a former global head of equity capital markets at Bank of America, who worked with Orcel at Merrill Lynch. “The reason it hasn’t happened is, it’s complicated.”

Ben Dummett contributed to this article.