# UniCredit gets ECB’s green light for second 1 billion euro share buyback Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-08-31 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: UniCredit gets green light for 1 billion euro buyback Meta Description: UniCredit secures green light for second tranche, boosting capital distribution goals and positive outlook for other lenders. URL: https://financedigest.com/unicredit-gets-ecbs-green-light-for-second-1-billion-euro-share-buybackhtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-08-31t123359z2lynxmpei7u0lfrtroptp4unicredit-results-1736815319153-compressed.jpg) By Valentina Za MILAN (Reuters) – UniCredit on Wednesday said it had gained supervisory approval for a new share buyback of up to 1 billion euros ($1 billion), putting it on track to hit its capital distribution goals despite economic recession risks. Analysts welcomed the European Central Bank’s green light for the second tranche of UniCredit’s buyback, saying it highlighted a case-by-case approach with positive implications for other lenders such as Nordea and ING. UniCredit’s large exposure to Russia had appeared to threaten its capital distribution plans when the [Ukraine conflict](https://www.financedigest.com/gorbachev-died-shocked-and-bewildered-by-ukraine-conflict-interpreter.html "Gorbachev died shocked and bewildered by Ukraine conflict – interpreter") first broke out. UniCredit said in March it would only execute the buyback in full if its core capital ratio remained above 13% despite the [impact of the Russia](https://www.financedigest.com/russia-could-hike-rates-in-2023-if-inflation-risks-have-big-impact-cenbank.html "Russia could hike rates in 2023 if inflation risks have big impact -cenbank") crisis. Since then, however, the bank has completed a first 1.58 [billion euro](https://www.financedigest.com/eu-seeks-clarification-on-italy-post-covid-plan-freezes-19-billion-euros.html "EU seeks clarification on Italy post-COVID plan, freezes 19 billion euros") buyback, repurchasing 7.4% of its own share capital. In July it went on to seek ECB clearance for the second tranche, on which [shareholders will vote](https://www.financedigest.com/hsbc-board-recommends-shareholders-vote-against-spin-off-resolution.html "HSBC board recommends shareholders vote against spin-off resolution") on Sept. 14. Given the [risks stemming from the bank’s Russian exposure](https://www.financedigest.com/preventing-an-operationally-crippling-ransomware-attack-do-you-know-where-your-risk-exposure-lies.html "PREVENTING AN OPERATIONALLY CRIPPLING RANSOMWARE ATTACK – DO YOU KNOW WHERE YOUR RISK EXPOSURE LIES?") along with the current macroeconomic uncertainty/risks, we believe that the buyback approval is a vote of confidence for UniCredit,” Berenberg analysts said. Shares in UniCredit gained 3.8% by 1121 GMT, outperforming a 1.2% [rise in Italy’s banking](https://www.financedigest.com/sterling-rises-as-receding-bank-sector-worries-lift-sentiment.html "Sterling rises as receding bank sector worries lift sentiment") index. The latest buyback amounts to 32 [basis points](https://www.financedigest.com/fed-officials-still-leaning-to-75-basis-point-rate-hike-in-july.html "Fed officials still leaning to 75-basis-point rate hike in July") of UniCredit’s highest quality capital ratio, which stood at 15.73% at the end of June. Under new CEO Andrea Orcel, the former investment [banking chief](https://www.financedigest.com/deutsche-bank-names-eigendorf-new-chief-sustainability-officer.html "Deutsche Bank names Eigendorf new chief sustainability officer") at UBS, UniCredit has embarked on a strategy that strives to maximise capital, generating 67 basis points in capital in the second quarter. Orcel has expressed confidence UniCredit will be able to replicate in 2022 the distribution goal achieved over 2021 earnings – which totals 3.75 billion euros when including the two buybacks and cash dividends – [despite the economic](https://www.financedigest.com/uae-plans-long-term-economic-ties-with-israel-despite-political-strains.html "UAE plans long-term economic ties with Israel despite political strains") slowdown. A lot would need to happen on the macro front for the distribution plan to fall apart, in our view,” broker Autonomous said, adding the [stock was cheap even when considering political uncertainty in Italy ahead](https://www.financedigest.com/stocks-dollar-pause-ahead-of-powell-biden-speeches.html "Stocks, dollar pause ahead of Powell, Biden speeches") of snap polls on Sept. 25. UniCredit said the ECB had approved the buyback after analysing the [bank’s capital](https://www.financedigest.com/austrian-regulator-orders-system-relevant-banks-to-up-capital-buffers.html "Austrian regulator orders system-relevant banks to up capital buffers") projections under conservative assumptions and updated adverse macroeconomic scenarios. The ECB had said in June it would ask banks to [factor in a potential recession when calculating their capital trajectories as part of discussions with supervisors over capital distribution plans](https://www.financedigest.com/3-factors-to-plan-for-in-2017-a-year-like-none-other.html "3 Factors to Plan for in 2017, A Year Like None Other"). ($1 = 0.9979 euros) (Reporting by Valentina Za; editing by Agnieszka Flak, Keith Weir and Jane Merriman) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---