Because Unicredit doesn’t give a damn about Russia and the shareholders toast

10 March 20222 years ago babelfish

Unicredit: the note on the exposure in Russia, the confirmation of the cash dividend for 2021 and the repurchase of shares. All the details

Unicredit shot on Wednesday 9 March on the stock exchange after the slips of the last few days due to the Russia-Ukraine war. Here are all the details.

The recovery of the European stock exchanges continues, which further lengthen the pace in the last part of the session and await tomorrow's summit between the foreign ministers of Russia and Ukraine.

In Milan, the Ftse Mib reached + 6% and rose by 6.02% to 23,682 points. Frankfurt (+ 6.84%) and Paris + 6.12% are also far behind, while London is lagging behind (+ 2.35%), held back by realizations on commodity stocks.

Among the blue chips of Piazza Affari, UniCredit flies to + 11.99% after having reassured the market on the sustainability of dividends and buybacks even in the event of a devaluation of Russian assets.

also Stellantis (+ 10.92%) and Intesa Sanpaolo (+ 10.29%), while the oil and defense stocks are taking a break after the recent rides.

“Despite the Ukrainian crisis, Unicredit reassures shareholders, confirming the cash dividend proposed for 2021 of 1.2 billion and the repurchase of shares up to 2.58 billion”, underlined Mf-Milano Finanza .

The economists Ignazio Angeloni and Daniel Gros wrote in the Sole 24 Ore : “Exposure regarding the euro area is however concentrated in three countries: France and Italy (both for around 23 billion euros) and Austria for 15 billion; moreover, within these countries the exposure is concentrated in some large institutes. In absolute terms, Société Générale is among the most exposed, for more than half of the entire overall exposure of France. UniCredit is the most exposed among the Italians, about half of the total Italian figure or 1.3% of the bank's total assets. Intesa Sanpaolo is present, to a lesser extent, through local subsidiaries and guarantees to Russian counterparties. Reiffeisen's position in Austria would seem more delicate, with an exposure that could exceed 10% of assets ” .

Last night UniCredit, one of the major European banks most exposed in Russia ( here the in-depth analysis by Start Magazine ), detailed its exposures in the country that invaded Ukraine.

UniCredit Bank Russia has a self-financed credit position of € 7.8 billion at the end of 2021, an RWA of € 9.4 billion and a net worth of € 2.5 billion.

Net of foreign exchange hedges, direct exposure to UniCredit Bank Russia (UCBR) is reduced to approximately € 1.9 billion.

Exposure is almost entirely to major Russian multinationals, mostly in EUR and USD currencies, with contracts governed by international law and subject to international courts. The counterparties impacted by the sanctions represent less than 5% of the overall cross border exposure.

The Italian bank has a mark-to-market exposure in derivatives to Russian banks of approximately € 300 million, net of collateral. The maximum potential loss in the event that the value of the RUB approaches zero is approximately 1 billion euros.

In the extreme scenario, in which the totality of the maximum exposure cannot be recovered and is zeroed, the impact on UniCredit's CET1 ratio at the end of 2021 (15.03%, which discounts the dividend accrued in 2021 for 1.2 billion euros ) would be around 200 basis points.

“Our strong capital position would allow us to absorb this impact without falling below 13%,” the bank emphasizes.

UniCredit confirmed the proposed cash dividend for 2021 of € 1.2 billion, maintaining a CET1 ratio above 13% even in the worst case scenario. It also confirms its intention to execute the share buyback up to the previously agreed amount of € 2.58 billion, under the condition that our 2021 year-end pro forma CET1 remains above 13%. A final capital impact of our Russian exposures of less than 200 basis points will allow us to use up to an equivalent amount for share repurchases.

"We will provide updates to the market on the development of the exposure to 200 basis points on a quarterly basis, unless the improvement is not more than 25 basis points, in which case we will provide an ad hoc update," says the bank, noting that the CET1 target capital ratio remains within the range of 12.5-13%

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FOLLOWING THE UNICREDIT INTEGRAL PRESS RELEASE:

UniCredit has been present in Russia since 2005 and has already been able to adapt and operate in the past in full compliance with sanctioning contexts. We are closely monitoring developments in the country, in full cooperation with regulators, using dedicated teams of experts who have established robust contingency plans to protect our operations staff in the area, customers across Europe and shareholders.

UniCredit Bank Russia has a self-financed credit position of € 7.8 billion at the end of 2021, an RWA of € 9.4 billion and a net worth of € 2.5 billion. Net of foreign exchange hedges, our direct exposure to UniCredit Bank Russia (“UCBR”) is reduced to approximately € 1.9 billion.

Cross-border exposure to Russian customers is currently equal to approximately € 4.5 billion, net of guarantees of approximately € 1 billion by non-Russian public export agencies, and represents approximately € 3 billion of RWA. . Exposure is almost entirely to major Russian multinationals, mostly in EUR and USD currencies, with contracts governed by international law and subject to international courts. The counterparties impacted by the sanctions represent less than 5% of the overall cross border exposure. The main exposures of the portfolio refer to the following sectors: approximately 30% to oil and gas, approximately 20% each to transport and machinery & metals, approximately 10% to chemicals, approximately 8% to financial institutions and the remainder towards a mix of other sectors.

We have a mark-to-market derivatives exposure to Russian banks of approximately EUR 300 million, net of collateral. The maximum potential loss in the event that the value of the RUB approaches zero is approximately 1 billion euros.

In the extreme scenario, in which all of our maximum exposure cannot be recovered and is canceled out, the impact on UniCredit's CET1 ratio at the end of 2021 (15.03%, which discounts the dividend accrued in 2021 of 1.2 billion euro) would be around 200 basis points. Our strong capital position would allow us to absorb this impact without falling below 13%.

Although this extreme scenario is not considered as a base case, our approach to distribution is prudent and sustainable. By virtue of this, we confirm the cash dividend proposed for 2021 of € 1.2 billion, maintaining a CET1 ratio above 13% even in the worst case scenario.

Furthermore, we confirm our intention to execute the share repurchase up to the previously agreed amount of € 2.58 billion, on the condition that our 2021 year-end pro forma CET1 remains above 13.0%. A final capital impact of our Russian exposures of less than 200 basis points will allow us to use up to an equivalent amount for share repurchases. We will provide market updates on the 200 basis point exposure development on a quarterly basis, unless the improvement is greater than 25 basis points, in which case we will provide an ad hoc update.

Our target CET1 capital ratio remains within the range of 12.5-13.0%.

We continue to dynamically manage our risk exposure, constantly assessing the potential impact of the conflict on global GDP and public policies.

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-unicredit-se-ne-frega-della-russia-e-gli-azionisti-brindano/ on Wed, 09 Mar 2022 08:53:35 +0000.