U.K. hedge fund Caius Capital LLP asked UniCredit SpA's CEO to urgently clarify the regulatory treatment of a complex financial instrument the bank considers to be top-quality capital, Reuters reported May 11.

In a letter, Caius Capital said there were "significant uncertainties" regarding how regulators treat Cashes, or convertible and subordinated hybrid equity-linked securities, which Italy-based UniCredit classifies as both common equity Tier 1 and Tier 2 capital.

The hedge fund has argued they should not be treated as CET1, and called into question the adequacy of UniCredit's capital buffer.

It requested publication of full terms and conditions of its agreement relating to the Cashes' treatment, according to the report.

"We believe that investors are owed the maximum level of transparency given the materiality of the issues raised," the hedge fund said.