(The following statement was released by the rating agency)
MILAN/LONDON, March 26 (Fitch) Fitch Ratings has assigned
(BBB+/Negative/F2/bbb+) planned issue of additional Tier 1
capital notes an
expected rating of 'BB-(EXP)'.
The final rating is contingent upon the receipt of final
documents conforming to
information already received.
KEY RATING DRIVERS
The notes are CRD IV compliant, deeply subordinated additional
Tier 1 fixed rate
resettable debt securities, with a call after 10 years. The
notes are subject to
write-down if UniCredit's consolidated or unconsolidated Common
Equity Tier 1
(CET1) ratio falls below 5.125% (end-2013 consolidated CET1
ratio was 9.36% on a
fully-loaded basis and the parent-only Core Tier 1 Basel 2.5
ratio was 26.6% at
the same date), and any coupon payments may be cancelled at the
of the issuer.
In accordance with Fitch's criteria for 'Assessing and Rating
and Hybrid Securities', the rating assigned to the notes is
UniCredit's stand-alone creditworthiness as represented by its
(VR), currently at 'bbb+'. The notching reflects the notes'
higher expected loss
severity relative to senior unsecured creditors (two notches)
non-performance risk (three notches).
The 5.125% trigger only refers to a write-down of the notes and
that the Italian regulator would demand coupon deferral well
hits the 5.125% threshold. However, Fitch believes that
fully-loaded CET1 ratio combined with its plans to return to
the next three years, provide a sufficient CET1 capital buffer
to limit the
notching for non-performance risk to three notches. Fitch views
profitability plans as viable, particularly given the
impairment charges expensed in 2013 to reduce the underlying
credit risk of its
impaired exposure and which are likely to be a one-off.
Fitch has assigned 50% equity credit to the securities. This
view that the 5.125% trigger is not so distant to non-viability,
the instrument's "going concern" characteristics. It also
reflects the notes'
full coupon flexibility, their permanent nature and the
subordination to all
As the notes are notched from UniCredit's VR, the expected
rating assigned to
the notes is broadly sensitive to the same factors as those that
UniCredit's VR. The notes' rating is also sensitive to any
change in notching
that could arise if Fitch changed its assessment of the
probability of the
notes' non-performance risk relative to the risk captured in
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Media Relations: Hannah Huntly, London, Tel: +44 20 3530 1153,
Additional information is available at www.fitchratings.com.
Applicable criteria, "Assessing and Rating Bank Subordinated and
Securities", dated 31 January 2014, and "Global Financial
Criteria," dated 31 January 2014, are available at
Applicable Criteria and Related Research:
Assessing and Rating Bank Subordinated and Hybrid Securities
Global Financial Institutions Rating Criteria
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