The largest bank in Italy, the UniCredit group, which also has a branch in Slovakia, surprised the profits to a minimum. It can write off an investment value of € 846 million from 46% of its share capital in Turkey's Yapi Kredi Bank.
This Turkish bank is the sixth largest asset market in the country and apparently negotiates with Iran. But it is on the US sanction list due to the nuclear program. The marketing or financing of this state is therefore a risk. As a result, UniCredit faces differences in the US, which will probably not be cheap. This is why he postponed another € 741 million for possible differences.
The fact that the US authorities have difficulty pulling their fingers has been persuaded in the past by other major European banks. Several Swiss banks have received an ominous fine to hide taxpayers from the US who have escaped taxes.
Loss of profits
The two operations resulted in UniCredit's net profits falling from EUR 2.82 billion to EUR 29 million for the third quarter, while analysts expect a profit of EUR 907 million. Profit declined so steeply as last year's Pioneer sales rose by 2.1 billion euros.
"It is a unique act that testifies the bank's attention and it's good that it has created it from its profits, "said Marcel Laznia, an analyst at the Slovak Banking Association, admitting that this could have a negative but minimal impact on the capital adequacy of the largest Italian bank in the future.
However, UniCredit believes and did not change its prospects for profit next year. He claims to be able to save costs to pay for sales breaks. "We are very conservative in Turkey and businesses, which we offset by lowering costs," commented Jean Pierre Mustier, Managing Director of UniCredit.
Its bank capital adequacy targets have been reduced due to a weak Turkish lire. In recent months, Turkey's economy has been severely weakened by President Recep Tayyip Erdogan's economic policy. Banks also harm the higher risk margins for Italian bonds. They are mainly purchased by the Italian banks and the European Central Bank.
The price of bonds increased especially since the European Commission rejected the populist government to approve its new budget with a larger deficit. Italy will have to comment and send a revised budget to Brussels the next Italian politicians have already said they will not fix anything.
According to analysts, it is more important that the bank has increased its operating profits and, as expected, has developed both interest income and fees. But they do not exclude the impact of this business on the future developments of the banks.
"Of course, this extraordinary expense may affect some potential investment intentions or shareholder dividends," explains Maroš Ovčarik, director of the finannykopas.sk portal. Since the bank has reduced its profits to a minimum, it should not pay dividends.
In the past, UniCredit was facing problems with a large amount of unpaid loans but increased its share capital by 13 billion euros last year and sold part of the bad credit.
The impact on Slovakia is questionable
Experts do not expect immediate impact on Slovak or Czech UniCredit Bank. "I do not think that her Czech and Slovak daughter would now need a financial contribution from her mother because her economy is profitable and stable," says Laznia.
The impact on the Slovak industry does not even appreciate M. Ovčarik and does not want to speculate prematurely. "It will be at the discretion of the parent bank," he adds.
TREND also addressed the Slovak UniCredit Bank, but did not want to express its results yet.