August 6, 2018 / 8:08 AM / 9 months ago

UniCredit seeks damages from Caius over CASHES inquiry

MILAN, Aug 6 (Reuters) - UniCredit is seeking damages of around 90 million euros ($104 million) from Caius Capital over the British fund’s action in recent months regarding a complex debt instrument used by the Italian bank.

Caius in May asked the European Banking Authority (EBA) to investigate the 2.98 billion euro convertible and subordinated hybrid equity-linked securities, known as CASHES, which UniCredit issued in 2008.

“UniCredit has filed a complaint against Caius Capital and the Caius funds in the Court of Milan seeking compensation of damages in the amount of approximately 90 million euros,” UniCredit said in a statement, adding it would not comment on ongoing proceedings.

Caius could not immediately be reached for comment.

The hedge fund had said the securities were misclassified as Common Equity Tier (CET) 1, or the best-quality capital held by a bank and a key measure of its financial strength.

Caius believes UniCredit, Italy’s biggest bank by assets, should convert the transaction into shares, which would increase the bank’s CET 1 ratio, but cause big losses for holders of the CASHES.

However, the EBA said last month that there was no clear evidence of a breach of Union law and that it had decided not to open a formal investigation.

On July 26, Caius said it would not take any further legal or regulatory action regarding the CASHES.

UniCredit shares were up 0.2 percent by 0739 GMT, compared with a 0.5 percent fall in Milan’s banking index. ($1 = 0.8648 euros) (Reporting by Agnieszka Flak; Editing by Kirsten Donovan)

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