The European Central Bank Instructs UniCredit to Scale Back Russian Operations
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The European Central Bank has ordered Italy’s UniCredit to reduce its business with Russia, according to two people who know about the discussions. This is because the regulator wants to stop European financial connections with Moscow, as the fines for invading Ukraine are still in place.
ECB Aims To Increase Pressure On European Banks Operating In Russia
The demands imposed by the European Central Bank on the second-biggest bank in Russia would be similar to what it requires from Austria’s Raiffeisen Bank International, which is the biggest Western bank.
RBI recently stated that the European Central Bank will ask it to reduce lending in Russia and also limit payments within a certain time.
After discussing for many months, the ECB will be sending a legally binding order to UniCredit to show its seriousness to fine the bank if it fails to comply. This is a notable increase in pressure to make UniCredit do less business in Russia. It’s almost the last step before the ECB can resort to punishments, like fines.
A formal warning from the European Central Bank to UniCredit would give Italy’s second-biggest bank a last chance to avoid such enforcement procedure with the supervisor, which could lead to punishments, said another person who knows about the situation.
Two years after the invasion of Ukraine by Russia, European regulators are putting more pressure on its banks because the fighting is still going on.
The Bank Seeks To Navigate Business Operations
The countries in the West are making sanctions on Russia stricter. The Group of Seven big industrial countries is now studying ways to use frozen Russian government assets to help Ukraine.
But two big banks in the area, UniCredit and RBI are still working with Russia. This is getting attention from authorities in the United States.
Both banks have been in Russia since the Soviet Union collapsed more than thirty years ago. Shares in UniCredit went down a bit more after the Reuters report and were last 0.9% lower, not doing as well as the whole market.
In February, UniCredit’s Chief Executive Officer, Andrea Orcel stressed that the bank’s plan for Russia hasn’t changed and that the Italian bank is still reducing its business.
The bank’s Russia unit generated about 890 million euros in profit before taxes in 2023, which is about 7.7% of the whole group’s profit. That compares with the profit of 210 million made before taxes In 2021.
