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Negative rates may be curbing credit case-by-case, says UniCredit's Mustier

Banks have benefited from negative rates, but EBF president Jean Pierre Mustier says the downsides are increasing.


UniCredit CEO Jean Pierre Mustier

Jean Pierre Mustier, head of the European Banking Federation and chief executive of UniCredit, has given a stark warning to the European Central Bank (ECB) on the risks of negative rates.

Speaking to Euromoney as part of an in-depth article on the effect of negative rates on banks, Mustier says the policy could already have curtailed credit supply or made it more expensive, on a case-by case basis – for particular banks, or particular clients.

“The ECB needs to be careful to not create a situation where people do the opposite of what is expected, when we reach the so-called reversal rate,” he says.

“This could lead some banks, in an environment when margins are tighter and the regulatory requirements are higher, to decide to buy back their shares rather than lend more.”

UniCredit is launching its first share buy-back in more than 10 years, although its loan growth is roughly flat.

The EBF president, whose own bank is unusual in having a big retail business in Italy and Germany, takes a markedly more measured and conciliatory tone on negative rates than other chief executives of big European banks.

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