UniCredit well positioned to weather Italian debt volatility – CFO


The Unicredit logo is displayed in this illustration taken May 3, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

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MILAN, June 8 (Reuters) – UniCredit (CRDI.MI) is well placed to weather the volatility in Italian government bonds, the group’s chief financial officer said on Wednesday, dismissing concerns about the impact of a recent expansion rate differentials with the German debt.

The premium paid by Italian bonds over safer German Bunds hit a two-year high this month at more than 2 percentage points as the European Central Bank (ECB) moves to tighten policy ultra-accommodating, which particularly stimulated debtors. southern European countries.

As large holders of domestic public debt, Italian banks are exposed to falling bond prices, which can deplete their capital buffers.

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However, UniCredit chief financial officer Stefano Porro said on Wednesday that the group had earmarked more than 55% of its 41 billion euros ($44 billion) of Italian government bonds among assets “held for recover” (HTC).

HTC’s accounting classification of bonds prevents fluctuations in their market prices from eating away at lenders’ capital ratios.

Speaking at Goldman Sachs’ 26th annual European finance conference in Rome, Porro said a 10 basis point widening in the Italian bond asset swap spread had only narrowed by 2 basis points UniCredit’s Tier 1 capital ratio.

“In terms of sensitivity… not important,” he said. “And we don’t expect significant changes in exposure, neither in the investment portfolio as a whole nor in the Italian government portfolio.”

Porro said he did not foresee a structural widening of Italian bond spreads, pointing out that foreign investors only held a fifth of global debt and that the ECB was ready to counter the unwarranted fragmentation of credit terms. financing between euro area countries.

Asked about the impact of rising interest rates on the quality of the bank’s assets, the chief financial officer said that almost 30% of the bank’s corporate loan portfolio in Italy was made up of loans guaranteed by l ‘State.

($1 = 0.9314 euros)

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Reporting by Valentina Za Editing by Mark Potter

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