The largest bank in Italy, UniCredit Group, which also has a branch office in Slovakia, surprised the profit to a minimum. It may write off an investment value of 846 million euros from its 46 per cent stake in Turkey's Iapi Kredi bank.
This Turkish bank is the sixth largest stock market in the country and is obviously traded with Iran. But he is on the US sanction list because of the nuclear program. Therefore, the trading or financing of this country is a risk. UniCredit therefore faces litigation in the US, which is probably not going to be cheap. That is why it postponed another 741 million euros for potential litigation.
The fact that the US authorities have a hard time pulling their fingers have in the past been convinced by other major European banks. Several Swiss banks received ominous fines for hiding taxpayers from the US who avoided taxes.
Loss of profit
These two operations have led to the fact that UniCredit's net profit fell from 2.82 billion euros to 29 million euros in the third quarter, while analysts expect a profit of 907 million euros. Profit also fell, as last year sales of Pioneer rose by 2.1 billion.
"It's a one-time operation in which it testifies the bank's caution and it's good that it created from its profit, "said Marcel Laznia, an analyst with the Slovakian banking association. He admits that this could have a negative but little impact on the capital adequacy of the largest Italian bank in the future.
UniCredit nevertheless believes and has not changed its prospects for profit next year. He claims he can save costs in order to pay off the sale. "We are very conservative in Turkey and in business, and we are compensated for by cutting costs," said Jean Pierre Mustier, General Manager of UniCredit.
His bank's adequacy goals were interrupted due to the weak Turkish lira. In recent months, Turkey's economy has severely weakened the economic policies of President Recep Tayyip Erdogan. Banks also violate a higher risk margin on Italian bonds. Mostly they are bought by Italian banks and the European Central Bank.
The price of bonds rose especially after the European Commission refused a populist government to approve a new budget with a higher deficit. Italy should comment and send a revised budget next week to Brussels. Italian politicians have already indicated they will not fix anything.
According to analysts, it is more important that the bank increased its operating profits and, as expected, develop interest and fee income. But they do not rule out the impact of this operation on future events in banks.
"Of course, this one-time extraordinary expense may affect some of the potential investment intentions or shareholder dividends," explains Marosh Ovcarik, director of finannikopas.sk. As the bank has reduced its profit to a minimum, it will not have to pay dividend.
In the past, UniCredit had problems with a large amount of unpaid loans, but last year it increased its capital by 13 billion euros and sold a part of bad credit.
The impact on Slovakia is questioned
Experts do not expect any direct impact on the Slovak or Czech UniCredit Bank. "I do not think her Czech-Slovak daughter needed a financial injection from her mother, because her economy is profitable and stable," says Laznia.
The influence on the Slovak branch does not even evaluate M. Ovčarik does not want to speculate prematurely. "It will be based on the parent bank's discretion," he adds.
TREND addressed the Slovak UniCredit Bank, but did not want to express its results.