UniCredit CEO warns of more US bank bailouts after First Republic

  • JPMorgan announced Monday that it has acquired a significant majority of First Republic’s assets.
  • Banking authorities in the European Union, where UniCredit is headquartered, have said repeatedly that they do not see the same level of risk in the region.
  • The comments from the head of UniCredit came after the Italian bank announced its latest results.

Andrea Ursell, CEO, UniCredit.

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A senior banking executive highlighted the potential divergence in the fortunes of the financial sector in both Europe and the United States, which points to the possibility of further bailouts of US regional lenders.

“In the US it’s about bailing out distressed banks, and I don’t see any bailouts for distressed banks in Europe,” UniCredit CEO Andrea Ursell told CNBC on Wednesday.

“I think that in the United States, judging from yesterday, there may be more.”

On Monday, JPMorgan acquired a large majority of First Republic’s assets, which included about $92 billion in deposits. The takeover of First Republic followed the collapse of Silicon Valley bank and general concern about the stability of smaller US banks amid higher interest rates from the Federal Reserve. Leading economists told CNBC that an interest rate hike could expose more fragility in the US banking sector.

But banking authorities in the European Union, where Italy’s UniCredit is headquartered, have repeatedly said they do not see the same level of risk in the region, arguing that European banks are well-capitalized and face stronger regulation.

They also confirmed that UBS’ intervention to buy and rescue Credit Suisse took place outside the European Union, in Swizterland.

You might see more of these [rescues] In the United States, in my opinion, but in Europe this type of acquisition will not be the driver of the merger.

He added that after the Covid-19 pandemic and the Russian invasion of Ukraine, the biggest risk to the outlook currently is volatility.

The comments from the head of UniCredit come after the Italian bank announced its latest results on Wednesday. Net profit for the first quarter was 2.06 billion euros ($2.27 billion) in the first quarter – a jump of more than 41% from the previous quarter. The bank also announced a CET 1 capital ratio, a measure of a bank’s solvency, at 16.05% for the quarter.

UniCredit shares jumped about 5% on Wednesday after the results.

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