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November 7, 2022

UniCredit under pressure from ECB over dividend payouts, Russia exit

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Italian banking group UniCredit is under pressure from the European Central Bank (ECB) over its Russian operations and capital plans, the Financial Times reported, citing sources. 

As per the report, tensions between the lender and the ECB have grown after UniCredit CEO Andrea Orcel took control of the bank in April 2021. 

Both the entities have voiced their concerns in a series of letters, a source said, adding that the ties between the two were “more than just a little bit strained”.

Multiple sources aware of the discussion said that the Eurozone banking regulator has opposed UniCredit’s plan to distribute €16bn to shareholders by 2024.

The ECB says that the dividend payout plan contrasts with its official guideline that “banks should not set their dividend policies in terms of absolute amounts”.

The Italian bank is believed to have told the banking regulator that it can pay more to shareholders without compromising its balance sheet as it has high capital levels. 

The parties are also at odds due to UniCredit’s delayed exit from Russia

UniCredit, along with Austria’s Raiffeisen, is one of the European banks with large Russian operations, which is a source of risk for the bank. 

The ECB has been pushing UniCredit to leave Russia, where it has assets worth €2.4bn. 

Unlike France’s Société Générale, which sold its Russian arm to a local buyer, UniCredit’s chief has refused to sell the Russian assets to a local oligarch. 

However, the lender has held talks with buyers in China, Turkey and India, the report said.  

UniCredit has “committed to disengaging from Russia in an orderly and decisive fashion”, the publication said citing the lender. 

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