UniCredit Secures ECB Approval for Danish Compromise Methodology

Unicredit has secured approval from the European Central Bank (ECB) to apply the 'Danish compromise' methodology when calculating its consolidated capital ratios. This decision is worth an estimated 52 basis points on the Common Equity Tier 1 (CET1) ratio for UniCredit, according to the bank.

The Danish compromise allows insurance holdings to be treated with risk weights rather than being deducted from regulatory capital. As a result of this change, UniCredit's stake in Generali becomes less burdensome from a capital perspective. The bank currently holds 8.8% of Generali's share capital.

This development comes as Intesa Sanpaolo is preparing to make a bid for MPS, which controls 13.2% of Generali via Mediobanca. Intesa has stated that it would hold the stake in Generali as an equity investment and not interfere with its governance. However, UniCredit's status as a financial conglomerate under the Danish compromise could affect its ability to participate in this bid.