MILAN (Reuters) – Shares in UniCredit shot up as much as 8% on Wednesday, outperforming a sector rebound, after Italy’s No.2 bank detailed its exposure to Russia and confirmed its cash dividends and plans for a share buyback.
UniCredit said a worst-case scenario, in which it had to reduce its Russia exposure to zero, would knock 2 percentage points off its Common Equity Tier 1 ratio – a key measure of financial strength which stood just above 15% at the end of last year.
Provided that ratio remains above 13% UniCredit said it remained committed to a share buyback of up to 2.6 billion euros ($2.85 billion).
Citi analyst Azzurra Guelfi noted UniCredit’s disclosure on risks stemming from the Ukraine war was “more comprehensive than peers … and the capital scenario … more conservative.”
In addition to the potential losses linked to its Russian subsidiary, UniCredit detailed its cross-border and derivatives exposure.
Net of those, UniCredit’s position would be similar to that of peers most exposed to Russia, Citi said.
Among European banks, Austria’s Raiffeisen Bank International and France’s Societe Generale have the largest Russian exposure.
“The capital return is a key component of the group investment case, and any significant slowdown/reduction of the buyback is a key focus for the market, as well as asset quality/macro development and impact on group profitability,” Citi said.
($1 = 0.9132 euros)
(Reporting by Valentina Za; Editing by Keith Weir)
