UniCredit, Italy's second largest bank, is conducting an urgent review of its business in Russia and could decide to pull out of the country after the invasion of Ukraine, chief executive Andrea Orcel said today.
Orel made his comments at the Morgan Stanley European Financials Conference in London today.
He added the decision was complex and could take time because of the need to support the bank's local staff and European companies which are also trying to quit the country.
"We're considering exit, but we obviously need to balance the complexity and the consequences of what we do there," he said from the London conference.
"The greater impact is on the ground. It's 4,000 people - and I view them as colleagues - and 1,250 European companies that have kept quarters in the markets where we are and expect us to accompany them in the disentanglement," he said.
Orcel also said that the economic environment had changed because of the Ukraine crisis and that the bank was now assuming there would be stagflation.
"We'll have a shock," he said.
Orcel said that he still believed the bank could achieve cash distribution targets it set out in December but that was dependent on the broader economic environment.
UniCredit indicated last week that a full write-off of its Russian business, including cross-border exposure, would cost around €7.4 billion.
It has confirmed cash dividends in the worst case scenario, but made a proposed share buyback contingent on its core capital staying above 13%.
Orcel also cautioned that the crisis had raised the bar for M&A deals given UniCredit would now need to use its excess capital in part to cushion the shock.
