MILAN (Reuters) - UniCredit (CRDI.MI), Italy’s biggest lender by assets, expects Europe’s banking union to free up 7 billion euros ($9.4 billion) of capital from its German subsidiary HVB as capital requirements are equalized across the euro zone, the Financial Times reported on Wednesday.
In a report on its website, the FT quoted the head of public affairs at UniCredit, Giuseppe Scognamiglio, as saying he had been told by the German central bank that there was no reason why UniCredit had to hold a Tier 1 capital ratio of 17 percent at HVB, apart from being Italian.
Scognamiglio said that under Basel III capital rules due to come into force at the start of next year a Tier 1 ratio of 9 percent would count as fully capitalized, the FT reported.
“(Bundesbank president Jens) Weidmann confirmed there’s no particular reason but the fact that we don’t trust Italy,” Scognamiglio told a meeting of the European Council on foreign affairs, according to the FT. “Not UniCredit, Italy.”
Scognamiglio also said that repatriating 7 billion euros of capital from Germany could allow UniCredit to put an extra 40 billion euros into the Italian economy, the FT reported.
UniCredit declined to comment and the Bundesbank was not immediately available for comment.
The European Commission said in January it was looking at whether German bank regulator BaFin may be inhibiting free movement of capital by the way it enforces liquidity rules.
BaFin’s policy that banks - including subsidiaries of foreign lenders - keep sufficient liquidity for their German operations has drawn criticism from pan-European lenders.
UniCredit bought HVB in 2005. In its annual report for 2012 published in March, it said it was repatriating 1 billion euros from the German unit to the parent company.
HVB declined to comment, referring queries to comments made by CEO Theodor Weimer at the annual press conference, when he said no further special dividends were planned in favor of UniCredit, and that HVB felt comfortable with its capital buffers.
National regulators are currently responsible for monitoring capital adequacy. But officials say that with the European Central Bank due to take over supervision of EU banks in a year’s time, supervisory clashes within the euro zone should be ironed out.
($1 = 0.7460 euros)
Reporting by Silvia Aloisi, additional reporting by Andreas Kroener in Frankfurt; editing by David Evans