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UniCredit chief resists rush to capital increase for Basle III

UniCredit’s chief executive insists the bank has no immediate need to raise extra capital despite recent cash calls by rival Italian lenders ahead of Europe’s stress tests.

Federico Ghizzoni tells Euromoney that he “doesn’t feel under any pressure to rush” to access the capital markets, emphasizing that the bank already meets Basle III requirements eight years ahead of schedule.

UniCredit’s core tier-1 ratio is 8.58% under current rules. Even if diluted by the new Basle rules, the ratio would still be 7.3%, above the minimum threshold of 7%.

UniCredit, however, lags behind other leading European banks, such as Credit Suisse, HSBC and Barclays, which all have ratios above 10% under the present regime.

Still, Ghizzoni remains confident and believes the bank’s capital position will strengthen with renewed profit growth. By January 1, 2013, he believes its core tier-1 ratio will be 8.45%, if Basle III rules are applied – the level boosted by an expected 115 basis point increase, according to analysts’ consensus, from retained earnings.

Ghizzoni’s comments come after Intesa Sanpaolo’s recent €5 billion rights issue, which took the bank’s core tier-1 ratio to 10%, under current rules, and setting a new standard for commercial Italian banks. The country’s second biggest bank by assets made the cash call even though it, like UniCredit, already claimed to be Basle III-compliant.

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