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UK banks tend to get all the plaudits for the maturity of their funding strategies and even for having a decent amount of funding to raise. But, during the past 12 months, UniCredit has transformed itself from being a major Italian bank to being a major European bank. The acquisition of HVB has also meant that it is suddenly one of the most significant European issuers and it has moved into this situation without a false step.
For years it has been predicted that the euro and the single European market would make cross-border mergers and acquisitions in financial services a certainty. But the coming together of UniCredit and HVB is one of the rare examples of those expectations being met. The combined group is the number one or two retail bank in Italy, Germany, Austria and central and eastern Europe (CEE) – truly a force in European banking.
The first concern UniCredit had to face was capital erosion. Exactly a year ago, its tier 1 ratio stood at a highly respectable 8.03%.