“UniCredit SpA announced today the financial impacts of the changes made by the European Central Bank (‘ECB) to the terms and conditions of the Targeted Longer-Term Refinancing Operations (” TLTRO “), which generally negatively affect credit institutions with TLTRO loans “. This is what we read in a note issued this morning by the bank led by CEO Andrea Orcel.
“In light of UniCredit’s prudent recognition of the effects of the TLTRO and taking into account all the economic consequences of the ECB’s announcement, the estimate of the interest margin (‘NII’) for the entire year 2022, excluding the Russia has been updated to over € 9.7 billion, including a positive contribution from TLTRO to NII for the full year of approximately € 0.4 billion. No benefit is expected from TLTRO for UniCredit results as of
2023 – reads the note from Piazza Gae Aulenti – The information communicated in the third quarter of 2022 regarding the NII for 2023 remained unchanged, with a forecast of at least € 10.1 billion for the Group, excluding Russia. This
data presupposes a Deposit Facility Rate (“DFR”) of 1.5% and may undergo variations depending on the future trend of interest rates, volumes, the sensitivity of the remuneration of deposits to the trend in market rates and more . The sensitivity of UniCredit’s NII to interest rates, communicated with the results for the third quarter of 2022, remains unchanged at around € 0.5 billion on an annual basis for a further 100 basis point increase in the DFR. The changes announced by the ECB to the remuneration of the required reserves, now at the DFR at the ECB, have no significant impact ”.
On 27 October, the Governing Council of the ECB led by Christine Lagarde, in addition to announcing a rate hike of 75 basis points, announced that it had made changes to the maxi-loan program for banks, known as TLTRO III.
Thus we read in the communiqué of the European Central Bank:
“The Governing Council has also decided to amend the terms and conditions applied to the third series of targeted longer-term refinancing operations (TLTRO-III). During the acute phase of the pandemic, this tool was essential to counter the downside risks to price stability. Today, in light of the unexpected and exceptional rise in inflation, the instrument needs to be recalibrated to ensure that it is consistent with the broader monetary policy normalization process and reinforces the pass-through of policy rate increases to lending conditions. banking. Therefore, the Governing Council has decided to modify the interest rates applicable to TLTRO-III starting from 23 November 2022 and to offer banks additional dates for voluntary early repayment of the amounts “.
Last Thursday the ECB announced that it had raised the interest rate on main refinancing operations and interest rates on marginal lending operations and central bank deposits by 75 basis points, respectively to 2.00%, 2, 25% and 1.50%, with effect from 2 November 2022.