BLOOMBERG/ Geraldine Hope Ghelli
UniCredit has told European Central Bank (ECB) officials that it may create a German holding company to control part of its business, a move that is expected to reduce funding costs and help shield the Italian bank from any future crisis in its home country, reported Bloomberg.
The plan, which has not been finalised and is scheduled to be announced at the bank’s 3 December 2019 investor day. UniCredit may move some or all its non-Italian assets into the new holding. One option is to later list as much as 30 per cent of the new company and the other locations besides Germany are being considered.
UniCredit Chief Executive Officer Jean Pierre Mustier has emphasised the bank’s international ambitions since he took over in 2016. After spending the first part of his tenure cleaning up bad loans, cutting jobs and strengthening the balance sheet, the CEO expects to accelerate the rundown of non-essential business, adjust its holdings of Italian sovereign debt and improve its capital buffer.
Putting assets in a new Germany-based unit may help UniCredit lower funding costs. It’s credit default swaps, which track the perception of debt riskiness, indicate that borrowing is much cheaper for the Austrian and German units than they are for the parent company. The arrangement could also protect more assets from any potential political or economic crisis in Italy.
UniCredit owns Hypovereinsbank, one of the country’s biggest lenders with EUR 287 billion ($316 billion) of assets at the end of last year. The Italian bank has mostly failed to overcome resistance by regulators to use HVB’s liquidity to support parts of the group outside Germany.
HVB was seen as key to a potential UniCredit bid for Commerzbank, Germany’s second-biggest publicly traded lender. The Italian bank in May hired advisers for a possible deal, but the effort has since been put on ice.