MILAN (Reuters) – Note that investment in Atlas has a negative impact on banks’ creditworthiness because the fund will be required to subscribe for shares of banks that are at risk for a resolution and to buy junior securities issued against suffering which there is no market.
Writes in Moody’s credit Outlook today that UniCredit implications for the creditworthiness are greater because the bank has a smaller capital buffer than other institutions that invest in Atlas.
The agency also points out that it is waiting for the answer the ECB and the local authorities for the treatment for regulatory purposes of investment in Atlas. In particular it must be defined if the investment goes deducted from regulatory capital.
If UniCredit, which the fund will invest up to one billion Euros and is the main contributor with Intesa Sanpaolo, was forced to deduct the investment in Atlas from the regulatory capital would have a lower capital buffer to the minimum capital requirements set by the ECB after the Srep. At the end of 2015 UniCredit had CET1 fully loaded to 10.94% and a transitional 10.73% against a minimum requirement set by the single supervisor to 10%. “If the assets were to fall below the requirements set by the Srep additional Tier 1 instruments of UniCredit would be at risk of suspending the coupon,” says Moody’s.
As for the purchase of the junior tranche of the securitized loans, Moody’s notes that this allows banks to get rid of the weakest part of the risk-weighted assets by improving capital ratios. The agency identified in MPS and Banca Carige banks that will have the greatest benefit.
In the coming weeks Atlante will be expected to underwrite the unsubscribed shares increase capital tied IPO of Popolare di Vicenza up to 1.5 billion taking over precisely UniCredit who had the role of sole guarantor of the transaction.
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