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ECB bad-loan guidelines could have minor CET1 impact, UniCredit says

UniCredit SpA said increasing coverage of its stock of nonperforming exposures to meet nonbinding guidelines set out by the European Central Bank could have a minor impact on its common equity Tier 1 ratio.

The Italian lender's regulatory talks with the ECB could lead to a low annual single-digit basis-point impact on its common equity Tier 1 ratio for any additional coverage of its NPE stock for each year up to 2024, UniCredit said Jan. 16.

UniCredit noted that as of the third quarter of 2018, it had reduced its NPE portfolio by over €36 billion since the same period in 2016, and that it considers its coverage of NPEs as fully adequate.

Shares in several Italian banks fell Jan. 15 after a media report claimed that the ECB had asked lenders to cover 100% of their existing nonperforming loans, in addition to newly soured debt, within seven years, although a source told Bloomberg News that the ECB "did not broadly tell lenders under its supervision that they need to boost their coverage."

BPER Banca SpA, Banco BPM SpA, Unione di Banche Italiane SpA and Intesa Sanpaolo SpA had said the NPL coverage demands would not have a significant impact on their income and balance sheets for 2018.