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May 6, 2022

UniCredit puts aside €1.3bn to offset risks from Russian exposure

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UniCredit has set aside €1.3bn to counter its exposure to Russia as the lender is looking to exit the country. 

After Moscow launched a military offensive against Ukraine, the Italian bank revealed that its direct exposure to Russian operations stood at around €1.9bn.

The announcement comes alongside the bank’s first-quarter results, in which the bank reported a net profit of €1.2bn.

In the worst-case scenario of a complete write-off of Russian business, UniCredit faces a loss of around €5.3bn, which was earlier estimated at over €7bn. 

UniCredit CEO Andrea Orcel noted that the bank has “maintained a very strong CET1 ratio of 14%, which includes €1.6bn for the 2021 share buyback, dividend accrual and the negative impact of our exposure to Russia.”

“Whilst challenges undoubtedly lie ahead for the global economy due to the war in Ukraine and its broader impact, UniCredit is entering this period with a resilient and profitable model, and prudent capital and existing provisions,” he added.

The Italian bank, French lender Societe Generale and Austria’s Raiffeisen Bank International are among the banks most exposed to Russia.

UniCredit is conducting a review of its business as sanctions on Russia have made it extremely difficult for foreign firms to conduct business.

Regarding the bank’s Russian exit, Orcel had said: “No conclusions can be drawn overnight, but we will report soon with more detail.

“Obviously we need to seriously consider the impact and the consequences and the complexity of disentangling a full bank from the country.”

Last month, Societe Generale reached an agreement with Interros Capital to sell its Russian banking and insurance business. 

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