Italian UniCredit plans to leave Russia | Investment News
MILAN (Reuters) – UniCredit, Italy’s second-largest bank, is carrying out an urgent review of its business in Russia and may decide to pull out of the country following the invasion of Ukraine, chief executive Andrea Orcel said on Tuesday.
Speaking at the Morgan Stanley European Financials Conference, Orcel added that the decision was complex and could take time due to the need to support local bank staff and European companies also trying to leave the country.
“We’re looking at going out, but obviously we have to balance the complexity and the consequences of what we’re doing there,” he said at the London conference.
“The biggest impact is on the ground. It’s 4,000 people and I consider them colleagues… and 1,250 European companies who have kept their quarters in the markets where we are and expect us to accompany them in the disentanglement.”
Orcel also said the economic environment has changed due to the Ukraine crisis and the bank now assumes there will be stagflation.
“We’re going to have a shock,” he said.
Orcel said he still believed the bank could meet the cash distribution targets it set in December, but that depended on the broader economic environment.
UniCredit said last week that a full write-off of its Russian business, including cross-border exposure, would cost around 7.4 billion euros ($8.1 billion).
It confirmed cash dividends in the worst case, but offered a share buyback subject to its capital base remaining above 13%.
Orcel also warned that the crisis had raised the bar for M&A deals, as UniCredit would now have to use its excess capital in part to cushion the blow.
(Reporting by Valentina ZaWriting by Keith Weir; Editing by Agnieszka Flak)
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