UniCredit eyes 2025 targets to cut Russia exposure, no full exit
Sets 2025 targets to reduce Russia presence, but no full exit
Books charges after court seizure, partly offset by writebacks
Awaiting clarifications from ECB over Russia exit demands
Determined not to take unnecessary risks by complying with ECB
Recasts adding comments, 2025 goals over Russia exposure reduction
By Valentina Za
MILAN, July 24 (Reuters) -Italian bank UniCredit CRDI.MI said it aims to more than halve loans at its Russian unit by the end of next year to less than 1 billion euros ($1.1 billion), after challenging a European Central Bank request to speed up its exit.
UniCredit last month appealed to the European Court of Justice against ECB demands to cut ties with Russia.
"We remain determined not to take action that, by breaching local laws and regulation, provide Russia with a justified motive to intervene and take control of our local asset and the value that comes with it," CEO Andrea Orcel told analysts after UniCredit posted better-than-expected first-half results.
UniCredit owns Russia's 15th-biggest lender and has the second-largest presence there among European banks, after Austria's Raiffeisen RBIV.VI.
With Russian banks cut off from the SWIFT global payments system, Western banks play a key role in cross-border payments.
"All of our economies continue to purchase selected materials from Russia, and those materials go through the payment systems of three banks," Orcel said.
UniCredit plans to reduce cross-border payments at its Russian business to 8.5 billion euros by the end of next year, from 11.2 billion euros at the end of June.
Over the past two years, UniCredit has reduced its cross-border exposure to Russia to 300 million euros from 4.5 billion euros when Russia first invaded Ukraine in February 2022.
It aims to bring that exposure close to zero next year and to cut Russian deposits to less than 2 billion euros, which would be a 75% reduction since early 2022.
At the end of June, local deposits stood at 2.6 billion euros.
UniCredit's strategy of gradual disengagement contrasts with ECB demands European banks to quickly exit Russia due to the risk of U.S. fines and reputational damage.
Orcel said complying with the ECB's instruction may be inconsistent with Russia's legal framework in certain areas and that it had sought clarity from the ECJ to protect UniCredit from "unnecessary risks."
He said the ECB had agreed to "further clarify their request" and UniCredit would drop its ECJ appeal if the clarifications dispelled its concerns.
UniCredit on Wednesday reported a hit of around 200 million euros in the second quarter in relation to a court case involving a trade finance transaction at its Russian unit, but was able to offset half the amount by releasing provisions.
UniCredit Russia reported net profit of 116 million euros for the period with revenues up 26% from a year ago at constant currencies.($1 = 0.9223 euros)
Reporting by Valentina Za, editing by Cristina Carlevaro and Sharon Singleton
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