UniCredit's bank in Russia and the ECB's demands
By Valentina Za
MILAN, July 2 (Reuters) -Italian bank UniCredit CRDI.MI has filed a claim at the European Union's General Court (EUGC) over requests from the European Central Bank that the lender cut back its business in Russia.
Euro zone lenders can turn to the Luxembourg-based court to void decisions by the industry's supervisors.
UniCredit said on Monday the bank is asking the court to confirm that obligations set by the ECB are consistent with EU laws that enforce sanctions on Russia as well as Russian laws.
In the meantime, UniCredit is seeking a suspension of the ECB's requests pending the court ruling. In 2023, it took the court an average of around 20 months to close a case, according to its website.
With 56 branches at the end of last year and a full-time staff of about 3,150 people, AO UniCredit is Russia's 15th largest lender by assets, based on a ranking from April 2024 compiled by Interfax.
Below is a summary of AO UniCredit's key details:
PROFIT*
Higher interest rates have boosted AO UniCredit's income from lending after Russia's invasion of Ukraine in February 2022, despite a halving in customer loans to 3.2 billion euros ($3.43 billion) at the end of last year. Rising net fees have also helped.
* Figures in million euros
2023 | 2022 | 2021 | |
Gross Operating Profit | 955 | 974 | 335 |
Loan Loss Provisions | -5 | -882 | -39 |
Stated Net Profit | 665 | -200 | 210 |
Return on Allocated Capital | 21.7% | -14.3% | 12.8% |
DIVIDENDS
2023 - AO UniCredit Bank contributed 137 million euros in dividends last year out of a total of 3 billion euros UniCredit paid out to investors.
Following a 2022 Russian presidential decree, companies operating in the country need a green light from a governmental commission for the control of foreign investments to pocket dividend payments of more than 10 million roubles, which are initially deposited into a special account.
EXPOSURE
UniCredit has reduced its cross-border exposure to Russia by 91% since February 2022 and its local exposure by 65%, it said on Monday.
In presenting first-quarter earnings in May, it said it had cut both local staff and branches by around one fifth from the first quarter of 2022.
However, the value of its local participation in Russia, which UniCredit defines as including both equity capital and earnings, stood at 2.8 billion euros at the end of March versus 3.5 billion euros in early 2022.
OTHER CLAIMS AGAINST THE ECB
Euro zone lenders often challenge decisions taken by the ECB by turning to the EUGC, a division of the European Court of Justice. Many cases relate to banks' annual contribution to the Single Resolution Fund.
However, for example, in February Deutsche Bank DBKGn.DE and BHW Bausparkasse asked the court to scrap an ECB decision from the previous December forcing the banks to deduct from their best-quality capital some irrevocable payment commitments.
"The number of cases in the field of economic and monetary policy, which includes inter alia banking law, continues to rise every year, with 56 new cases brought in 2023," the EUGC said on its website.
($1 = 0.9321 euros)
Additional reporting by Tom Sims in Frankfurt; Editing by Jan Harvey
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
