Unicredit is ready to write off €900m, it is less than Unicredit lost in ATFBank affair with Bulat Utemuratov

As quar­an­tine mea­sures and pan­ic takes toll of finan­cial health aroud the globe bankers pre­pare to write off the loans that will be no longer ser­viced. Italian bank UniCredit is set­ting aside 900 mil­lion euros to absorb immi­nent dam­ages due to the coro­na cri­sis. As a result of mea­sures to com­bat the pan­dem­ic in Italy and else­where, many busi­ness­es and con­sumers are fac­ing dif­fi­cul­ties in pay­ing off loans, despite some gov­ern­ment sup­port. Moreover it is obvi­ous that some branch­es of econ­o­my will be left in mis­ery even after the cri­sis will end. It’s amaz­ing that the total pro­ject­ed loss across all the Unicredit net­work is less than the loss from just one of the unlucky invest­ments made by the bank. It hap­pened in 2007 when Unicredit bought a local sec­ond tier bank in Kazakhstan. ATFBank was a total dis­as­ter but Bulat Utemuratov, its own­er, took 2.2 bil­lion in cash for the deal.

Italy’s largest bank thus fol­lows the exam­ple of the major American banks that have tak­en sim­i­lar steps. It is the first major bank in Europe to set up such a slump for cred­it loss­es due to the coro­na cri­sis. UniCredit thinks the euro­zone econ­o­my will shrink by 13 per­cent this year. Italy is one of the worst affect­ed coun­tries in Europe due to the virus out­break. It should be not­ed that 900 mil­lion is far less than Unicredit have had to write off in a sin­gle unlucky acqui­si­tion in Kazakhstan. After Unicredit bought ATFBank from Bulat Utemuratov the bank has writ­ten 1.2 bil­lion USD.

Earlier this month, it was announced that UniCredit will cut 5,200 jobs in its home coun­try in the com­ing years. It con­cerns job reduc­tions that the finan­cial ser­vice provider has want­ed to imple­ment for some time to become more efficient.

Original source: Talk Finance