UniCredit SpA Chief Executive Officer Andrea Orcel said that his approach amid the recent turbulence in the banking sector is “steady as she goes,” and that his bank is well-capitalized and liquid.
(Bloomberg) — UniCredit SpA Chief Executive Officer Andrea Orcel said that his approach amid the recent turbulence in the banking sector is “steady as she goes,” and that his bank is well-capitalized and liquid.
Recent failures “were isolated cases, they were pretty much idiosyncratic, they highlighted that regulation has to be applied consistently across not only banks of any size but also all financial intermediaries,” Orcel said Wednesday in an interview at the Bloomberg New Economy Gateway Europe near Dublin.
The collapse of Silicon Valley Bank and the emergency rescue of Credit Suisse Group AG last month has rattled investors and raised questions about the broader stability of the financial industry at a time of soaring interest rates and higher inflation.
The executive argued that banks are built on trust and confidence. While European banking regulation has worked during the recent turbulence, it’s unrealistic to expect banks to be able to eliminate all risks – doing so would negate the role they’re meant to play in the economy, Orcel said.
“When you have these situations, people are reminded that banks are not all the same, that there are strong banks and less strong banks,” Orcel said. “Therefore you have a flow of deposits, a flow of liquidity toward the quality of the stronger banks away from the weaker banks.”
Banking Union
With a presence in 13 countries including a major business in Germany, Orcel said UniCredit wants to be the bank for Europe. But he sees cross border consolidation as difficult, since incentives are limited.
A more integrated EU “would create an immense opportunity for UniCredit,” he said. But UniCredit cannot become a pan-European bank if the EU is fragmented, it will not. And no other bank can do that.”
European banking fragmented along national lines after the 2008 financial crisis and political squabbling over risk-sharing has since prevented the completion of a unified market where lenders can freely move capital and liquidity across borders. A push last year failed to resolve the impasse, although the European Commission this week sought to regain momentum with a more limited package of measures.
Read More: EU Proposes Smoother Path for Winding Down Smaller Banks
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.