Will Unicredit say goodbye to Russia? Facts, numbers and unknowns
UniCredit CEO Andrea Orcel said he was "considering leaving" Russia, but "we must seriously consider the impact". Facts, numbers and context
What will Unicredit do in Russia?
Unicredit, the Italian bank most exposed to Russia, has not yet taken a decision on whether or not to continue its activities in the country. Exit, however, is a publicly stated possibility.
THE WORDS OF ANDREA ORCEL
Yesterday the CEO of Unicredit, Andrea Orcel, during a conference organized by Morgan Stanley, said that "we cannot take conclusions overnight" and that "we must seriously consider the impact and the consequences and the complexity of the complete detachment of a bank from the country ".
However, he added that "we are completing an urgent review of the country and are considering leaving". “It would be easy enough for me to say that we are leaving Russia. That would be what we all want to do but we have to seriously consider the impact ”.
THE NUMBERS OF UNICREDIT IN RUSSIA
Unicredit is the fourteenth bank in Russia and, according to a Credit Suisse study , is also the third most exposed European bank to the country, after the Austrian Raiffeisen Bank International and the French Société générale.
The institute recently announced that its direct exposure to UniCredit Bank Russia (the Russian subsidiary) "is reduced to approximately 1.9 billion euros".
It has seventy-nine branches in Russia, four thousand employees and 1,500 corporate clients; 1250 European companies rely on UniCredit to conduct business in the country.
The loans granted by Unicredit in Russia amount to 7.5 billion euros and the maximum loss would amount to 1.9 billion. It is a backlash that the institution considers absorbable without structural repercussions. The industrial plan and the remuneration plan of 16 billion in four years would therefore remain feasible, or so Orcel says he believes (but “it will depend on the macro scenario”).
Unlike Intesa Sanpaolo which works only in the corporate sector in Moscow, Unicredit has a retail structure.
DIVIDEND AND BUYBACK
Unicredit confirmed the 1.2 billion cash dividend even in the event of a total exit from Russia. And it could – reports Il Sole 24 Ore – sustain up to 2.6 billion buybacks in the event of a recovery of 40-50 percent of the exposures.
ECONOMIC IMPACT AND NATIONALIZATION RISK
There are many foreign banks that are considering leaving Russia. In addition to UniCredit, there is also Intesa Sanpaolo in Italy: it does not own a retail business there but is exposed on the corporate side, and manages more than half of the commercial relations between Russia and Italy. Abroad, Goldman Sachs, JPMorgan Chase, Deutsche Bank, Credit Suisse, Raiffeisen and Société générale could also leave the Russian market.
In addition to the sanctions, which could be tightened, there is a risk of a nationalization of the banks by the Moscow government.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/unicredit-russia-uscita-andrea-orcel/ on Wed, 16 Mar 2022 09:09:13 +0000.