* Impact of sanctions against Russia "marginal" - Ghizzoni
* Bank's net profit 403 mln euros, above analyst estimates
* Head of investment bank Mustier steps down
(Adds estimated impact from sanctions against Russia, details)
By Silvia Aloisi and Gianluca Semeraro
MILAN, Aug 5 Net profit at UniCredit,
Italy's biggest bank by assets, rose 12 percent in the second
quarter thanks to a marked improvement in its home market and a
solid contribution from eastern Europe.
The bank said Italy had contributed around 600 million euros
(801.72 million US dollar) to its earnings for the quarter, and
central and eastern Europe around 400 million euros.
UniCredit, the market leader in central and eastern Europe,
said sanctions against Russia would have only a "marginal"
impact on its business there, which accounted for around 4
percent of total revenues in the quarter.
"The bank seems strong enough to go through this storm,"
UniCredit Chief Executive Federico Ghizzoni said when asked
about tighter international sanctions against Moscow due to its
support for rebels in eastern Ukraine.
"This is not to say that we are not looking at the situation
with concern, but there is no systemic problem," he said, adding
the bank estimated a hit of up to 10-15 million euros in lost
In Italy, UniCredit said its domestic business had granted
new medium and long-term loans for a total of 6 billion euros in
the first half, up 52 percent from a year earlier. Net profit
was up 28 percent from a year earlier, making Italy the top
performing division for the second quarter in a row.
"We see the result in Italy as very encouraging for
UniCredit and the overall domestic sector," UBS analysts said in
The Italian economy is struggling to emerge from its longest
recession since World War II. Last month, the Bank of Italy cut
its estimate for 2014 growth to just 0.2 percent and warned that
there was significant uncertainty about the outlook for the euro
zone's third-largest economy.
UniCredit's second-quarter net profit of 403 million euros
compared with 361 million euros a year ago and 332 million euros
in an analyst consensus distributed by the bank.
The results were also helped by lower than expected
provisions on loan losses, totalling around 1 billion euros in
the first six months of the year.
Ghizzoni said in a statement the bank was now closer to its
full-year profit target of 2 billion euros, although he said
this was now more challenging because of higher than anticipated
The bank's shares were down 1 percent by 1537 GMT, with the
blue-chip FTSE MIB index down 1.6 percent.
INVESTMENT BANK RESHUFFLE
UniCredit like other European banks has cut jobs and shed
assets to bolster its financial strength in preparation for a
wide-ranging health check of the region's banks.
Over the past two months, it has listed a 34.5 percent stake
in online bank Fineco and sold an 81 percent holding in web
broker DAB. It is also in talks to sell its bad loans management
unit UCCMB and is looking for possible partners for its asset
management firm, Pioneer.
Ghizzoni said Pioneer was a strategic asset for UniCredit
and the idea was to keep a "strong stake" in the business.
The bank's Common Equity Tier 1 ratio, a measure of
financial strength, stood at 10.4 percent at the end of June
when including the Fineco and DAB operations, up from 9.5
percent three months earlier.
UniCredit also announced that Jean-Pierre Mustier, the head
of its investment banking operations, would leave at the end of
the year. He will be replaced by Gianni Franco Papa, an Italian
national and insider who is currently head of its central and
eastern European operations.
Mustier, a veteran investment banker who had joined
UniCredit in 2011 after a long career at Societe Generale
, will leave the bank to join an asset management
boutique, a source close to the matter told Reuters.
Papa, 58, is regarded as close to Ghizzoni, who himself used
to head eastern Europe before becoming chief executive in
(1 US dollar = 0.7484 euro)
(Additional reporting by Pamela Barbaglia in London; Editing by
Lisa Jucca and Jane Merriman)