His appointment changes the current emphasis on promoting Grey offices in each country as potential entry points for multinational advertisers entering the network.
Bagnall-Smith will be based in London, reflecting the fact that more pan-European business enters networks through the UK than via any other market.
Carolyn Carter, the president of the Grey global group for Europe, the Middle East and Africa, said the move was partly to achieve a better balance between its US-led multinational clients such as Mars and Procter & Gamble, but mostly to exploit the network's ability to build brands across borders.
Bagnall-Smith will report to Carter and to Steve Richards, the managing director of Grey's London agency.
Jo Smith remains the new-business director for the UK and will work with Bagnall-Smith on pan-European initiatives.
Carter said: "I'm a great believer in building from what you are really good at. Richard's role is to harness and leverage that strength to create new streams of revenue."
Bagnall-Smith has worked at WCRS, BMP DDB and Publicis, as well as Wunderman, the customer relationship marketing specialist. Most recently he has been working as a consultant with the agency selection company the Haystack Group.