UniCredit’s Fourth-Quarter Loss Only Slightly Larger Than Its Current Capital Raise

Italian banking is hard.
I, Sailko [GFDL, CC-BY-SA-3.0 or CC BY 2.5], via Wikimedia Commons

I, Sailko [GFDL, CC-BY-SA-3.0 or CC BY 2.5], via Wikimedia Commons

Mamma Mia! UniCredit may only be Italy’s second most-troubled bank at the moment, but boy oh boy did it have a show-stopper of a fourth quarter, losing €13.6 billion. For those keeping score, that’s €4 billion more than the €9.6 billion bad-loan write-off it announced last month, and €600 million less than its ongoing €13 billion rights offer, a big enough meatball for any of those investors to choke on.

On the bright side, and there’s not much of one when you’re looking at an €11.8 billion annual loss, things can only really go up from here, sayeth CEO Jean Pierre Mustier.

“2016 was a pivotal year for UniCredit,” Mustier said. “We took a number of decisive actions regarding legacy and operational issues to ensure the future success of the group….”

The bank’s fully loaded common equity Tier 1 ratio, a measure of financial strength, fell to 7.54 percent at the end of 2016, following the measures taken to improve the balance sheet. The ongoing share sale will restore the ratio to 11.15 percent.

UniCredit Posts Jumbo Loss on Loan Provisions, Charges [Bloomberg]