Unicredit SPA also known as Unicredit, Unicredit Bank and Unicredit Group (BIT:UCG, BIT:UCGR, BIT:UCR) is a major financial institution based in Rome and Milan that operates as a banking group. Although almost all operations are in Europe where strategic positions in 22 countries (though the 19 countries within the CEE region only make up 10.2% of total net banking income) and deep market penetration has enabled it to obtain both a high market share and strong European identity, it has worldwide market access (mainly through partnerships/projects like Global Finance Export Limited with international companies). Its ownership of many small banks in Italy helps to give it greater market access. It operates Bulbank, Bulgaria's largest bank with over 1.2 million customers and increased its market presence in the CEE region in 2008 after acquiring Kzakhstan's ATF Bank and 94.2% of CJSC Ukrosotsbank Ukraine.
In 2009 the bank had 252 fewer branches than the year before. There were 4696 in Italy, and 5103 abroad (52% outside of Italy which is 1.2% higher than in 2008). On September 26, 2010 it had a market capitalization of €37.3 billion ($50 billion American at an exchange rate of 1.344).
Within the retail division about 60% of loans to customers are household mortgages.
Although the banking group does very little retail business in the USA it does have a significant portfolio of assets there. The USA ranks third among all countries in terms of assets under management (AUM). In 2009 it was valued at €32.2 billion (18.3% of total) up from €29.7 billion (17.8% of total) in 2008. Though minor in terms of operating income, deposits and loans international markets outside of the largest three (Italy, Germany and Austria) contribute 26.2%, €46 billion in AUM (8.9% if the USA is not included), up from €40.3 billion, 24.2% in 2008 (6.4% if the USA is not included) reflecting the bank's expansion worldwide into non traditional markets.
In the first half of 2010 within the CEE the Ukraine and Russia had the lowest cost to income ratio's (34.1% and 35.1%) while the Baltics and Kazakhstan had the highest (129% and 121.3%). The highest revenue growths were in Russia and Romania (16.4% and 12.3%) while the worst revenue performance growth in the CEE was in the Baltics and Kazakhstan (-36% and -31%).
Retail Banking offers regular banking services to customers in Italy, Germany and Austria.
Private Banking provides services like wealth management, online banking, and trading. In Italy it is the largest private bank. Italian and international operations are separate.
Investment & Markets Banking offers services related to currency exchanges/rates (Rates & FX), Equities, Capital Markets and credit.
Asset Management runs through subsidiary Pioneer Investments whose business has international reaches. Pioneer also does business in hedge funds and mutual funds. Products include mutual and hedge funds.
Corporate & Investment Banking (CIB) is comprised of three main parts: Financing and Advisory - involved in price setting, deal structuring, and putting together the terms of deals. It also provides a supervisory role, Markets - services corporate and institutional clients in the foreign exchange, equities and capital markets (includes Global Distribution and Corporate Treasury Sales (CTS)), Global Transaction Banking (GTB) - operates in many areas of finance including trade and export, supply chain. It also provides global security services in addition to ebanking and cash management, Leasing - uses its own distribution network (which cooperates with other banking networks), to manage the pricing and selling of Unicredit's leasing production.
|€ mil||2008 retail|
CEE which operates in 19 countries in Eastern and central Europe has 3 regional corporate offices
The most important revenue generating countries within the CEE by 2009 operating income are Turkey (24.2%), Russia (12.9%), Croatia (12.3), Czech Republic (7.7%) and the Ukraine (7.6%).
|Key Metrics € mil||2007||2008||2009||1HFY09||1HFY10||Change 09/10 hlf)|
|net fees &commis||10,694||9093||7780||3735||4379||17.24%|
|Cost to Income ratio %||55||62||55.6||53.7||58.8||9.5|
|loans to customers||na||180,280||167,954||na||na||na|
In late 2009 and into mid 2010 the company was particularly impacted by a government debt crisis which affected financial markets (hedging, trading) resulting in a smaller net income. 2009 - early 2010 saw rising operating costs on account of higher variable compensation however total payroll fell especially in the second quarter of 2010 because of there being less staff and less variable compensation directly related to provisions being different.
Since the second quarter of 2010 results from Poland have been included in the retail, private banking and cib sections.
|Full Time Equiv (fte)||Italy||Germany||Austria||Poland||Turkey||other|
Shown is the number of employees by segment and number of employees by region per period. In 2010 Poland's Markets employees were listed under other divisions data for 2009 is given before and after the change. Employees considered are full time equivalent.
Alessandro Profumo, chief of Unicredit resigned after shareholders showed lackluster support for him during a confidence vote. Shareholder concerns are numerous (Profumo showed little accountability) but most recently stem from issues regarding foreign ownership especially by Libya (and the fact that the bank was slow in getting that information out). Profumo oversaw much of the bank's expansion into the CEE nations of Europe (net interest income from there grew from 15 to 17% of total) and the bank's profit was down over 50% in the last reported on fiscal year, that could be the perfect storm for a turbulent leadership transitionary period.
Italian cities like Milan are facing an economic crisis brought on by derivative swap contracts (used by governments to reduce financing costs) and uncertain interest rates. Although Unicredit was not one of the 4 major financial institutions that directly participated many of their subsidiaries may have been affected (500 Italian banks face €2.5 billion losses) and the problem could lead to an overhaul of the way derivatives are issues something that would affect Unicredit's business.
Newly introduced taxes on financial institutions have caused key banks to be more reluctant lenders in places where an economic turnaround is essential if Europe is to come out of the crises it faces. Banks operating in Eastern Europe (countries include Russia, Poland, Hungary, Austria, Ukraine, Bosnia and partly Romania) are being especially hard hit. Those new regulations have reduced growth in loans attributed in part to stagnation. In terms of multinational institutions Unicredit Group has the most assets in that part of Europe while Societe Generale ranked fourth.
The graph to the right compares the largest European banks based in the Eurozone.
|Financial Data 1hfy10 unless ow stated||Societe Generale||Unicredit Group||ICBC||Intesa Sanpaolo||Credit Agricole|
|Net Interest Income (€ mil)||30,545('09)||17,568('09)||15,896||10,486('09)||na|