(Bloomberg) -- Credit Agricole SA appointed Olivier Gavalda to replace outgoing Chief Executive Officer Philippe Brassac, handing the top role to a lifelong veteran of the banking group as it contends with threats to its business interests in Italy.
Gavalda will start after the general shareholders’ meeting on May 14, the French bank said on Tuesday. Brassac, who’s 65, has reached the company’s age limit for the role.
The new CEO will take over while Credit Agricole is responding to a string of potential bank deals in Italy that are set to reshape its biggest market outside France. As part of that effort, the firm has expanded its stake in local lender Banco BPM SpA, asserting itself as a key player in the takeover battle unfolding around that bank.
Gavalda will also be working on a new three-year strategy, according to people familiar with the matter.
The new CEO “is a pure Credit Agricole product, is part of the same movement as Philippe Brassac,” said Bruno Demontrond, a fund manager at Financiere de la Cite. Gavalda’s new strategy “will probably be a continuation of what Brassac had done those past few years.”
Credit Agricole faces the challenge of offsetting an expected revenue hit from lower interest rates with an increase in asset management fees, Demontrond said. Gavalda will also need to continue pursuing the lender’s “policy of international diversification,” he said.
The bank, which is France’s second-largest, was among seven lenders in the country downgraded by Moody’s Ratings on Tuesday. That decision came in response to prolonged political turmoil.
The move reflects Moody’s “view that France’s public finances will be substantially weakened over the coming years, because political fragmentation is more likely to impede meaningful fiscal consolidation,” the company said in a statement.
Gavalda, born in 1963, is a deputy CEO at Credit Agricole, in charge of the company’s universal bank. He has spent his entire career at the wider banking group, much like Brassac.
The board picked Gavalda out of a slate of candidates who were all internal, given the complex structure of the lender, which is controlled by 39 regional banks, the people familiar with the matter said.
Unlike Brassac, Gavalda may serve only one term as CEO given the bank’s retirement rules, the people said, asking not to be identified discussing private information.
A spokesperson for Credit Agricole declined to comment.
Brassac’s departure in May will cap a 10-year tenure that saw the lender continue its expansion in Italy, including through the acquisition of Pioneer Global Asset Management from UniCredit. The milestone purchase, agreed in 2016, propelled its asset management arm Amundi SA further into the top ranks of global money managers. It came with a 10-year distribution deal with UniCredit that has become an important source of revenue for Amundi.
Shares of Credit Agricole rose 1% at 11:55 a.m. on Wednesday in Paris. They are down slightly since Brassac became CEO, roughly tracking the performance of the broader European finance industry.
The current CEO “arrived at the helm of Credit Agricole after a very turbulent period for the bank,” said Jerome Legras, head of research at Axiom Alternative Investments. “He has brought sanity, stability, and a much simpler and calmer governance back to the group.”
As he lays out his strategy for the coming years, Gavalda will have to navigate Credit Agricole’s various interests in Italy, while contending with the impact of political turmoil at home.
“The transition within the general management of Credit Agricole SA will be organized in the coming months,” the firm said in the statement on Tuesday.
(Updates with analyst comment in fifth and sixth paragraphs.)
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