Exclusive: ECB is happy with UniCredit's turnaround plan: source

Tue Jan 31, 2017 3:01pm EST
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By Silvia Aloisi and Paola Arosio

MILAN (Reuters) - UniCredit (CRDI.MI: Quote), Italy's biggest bank, has assured investors the European Central Bank is happy with its turnaround plan and will not require it to book more writedowns on its bad loans than already envisaged, a source said on Tuesday.

UniCredit shares fell on Monday when it revealed the ECB had asked it to present a plan to cut bad loans by Feb. 28, raising concerns the regulator could demand extra measures.

UniCredit plans to raise 13 billion euros ($14 billion) in equity capital to compensate for its bad-loan writedowns as well as other losses in the biggest share sale to ever be launched by an Italian bank.

Chief Executive Jean-Pierre Mustier convened a closed-door meeting of investors on Tuesday, telling them the ECB was content with the plan unveiled in December, according to the source, who attended the meeting in Milan.

Under that plan UniCredit outlined steps to overhaul its business and strengthen its balance sheet, including the sale of some assets, the sale of 17.7 billion euros in bad loans and the issue of new shares to raise 13 billion euros.

The ECB has asked UniCredit, along with some other European banks, to separately submit a formal proposal for reducing bad loans by end-February. That request does not imply any criticism of UniCredit's current plan, and the bank will submit the same steps on bad loans as it outlined in December, the source said.

"There has been no new request from the ECB," the source quoted Mustier as saying.

Two other sources with knowledge of the matter said the bank's plan had been discussed in detail with the regulator.   Continued...

Unicredit bank logo is seen on a banner downtown Milan, Italy, May 23, 2016. REUTERS/Stefano Rellandini/File Photo