UniCredit will only set up a separate legal organization for its international operations if spreads between Italian and German government bonds are more than twice as wide as today, chief executive Jean Pierre Mustier tells Euromoney.
The CEO wants the sub-holding company to be ready in the event of a renewed spike in Italian sovereign risk, as “we like to be prepared”, he says.
Questions about the possible new structure have been growing since the Milanese group named former Italian finance minister Pier Carlo Padoan as its next chairman in October. Around the same time, it hired Goldman Sachs and JPMorgan to advise on an update to its 2020 to 2023 strategic plan, due in early 2021.
UniCredit first announced the sub-holding scheme in late 2019 as part of its existing 2023 plan. The Italian government bond (BTP)-Bund spread had been about 250 basis points for much of 2018 and 2019, while the Northern League was in a populist governing coalition with the Five Star Movement.
However, the bank has not moved forward with the scheme yet. And according to Mustier, it is only worthwhile doing so if the spread between 10-year BTPs and their German equivalents (Bunds) is well above 300 basis points and closer to 400bp.
