UniCredit CEO says no big impact from bank tax, but uncertainty harmful

MILAN (Reuters) – The surprise bank tax Italy’s government introduced in August has no major impact on UniCredit’s earnings, but the uncertainty it stoked is damaging, Chief Executive Andrea Orcel said on Wednesday.

Addressing a financial conference, Orcel also said the debate over deposit rates, which has seen banks come under attack for not passing on higher interest rates to savers, was misguided.

UniCredit is currently passing on between 20% and 25% of higher rates to Italian depositors, he said, less than anticipated. The increase since the end of June has only been of two percentage points.

However, banks provide products such as money market funds or term deposits for depositors to invest their cash in, where they can get higher returns.

“It’s just sad that people focus on one thing all the time,” Orcel said.

“The current account is a service you use to pay your bills … clients care about the fees we charge and we have cut those, we cut 240 million euros in fees.”

Italy’s conservative government in August approved a one-off tax on profits banks reaped thanks to higher rates, saying they were not sharing enough of their record profits with depositors.

Muddled communication by the government sent bank shares diving until it became clear Rome would not seek to reap more than 3 billion euros in total, with proceeds capped at 0.1% of bank assets.

“The bank tax in terms of numbers is not going to have a very meaningful effect, our [capital] distribution [for 2023] is confirmed in excess of 6.5 billion euros and that’s it,” Orcel said.

UniCredit said on Wednesday it was bringing forward up to 2.5 billion euros of its 2023 buyback and would start it after supervisory and shareholder approvals.

While there is no big impact from the bank tax, Orcel said “the noise in the system from what governments and regulators are doing or thinking of doing creates uncertainty”, causing “credibility issues”.

Unlike other European lenders, Italian banks did not charge people to hold their cash when rates were negative.

Orcel said it was a mistake to “take as normal … the last decade. Having rates at minus 50 basis points is not normal, nowhere in the world that is normal.”

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