Compliance
Compliance Corner - UniCredit
The latest compliance issues in wealth management across the UK, Europe, Middle East and Africa.
UniCredit
Italian banking group UniCredit, which has a
wealth management operation, is seeking damages of around €90
million ($104.3 million) from Caius Capital, a UK hedge fund
group.
The complaint filed is surrounding the British hedge fund’s
action in recent months regarding a complex debt instrument used
by the bank, it said in a statement.
London-based Caius in May asked the European Banking Authority
(EBA) to investigate the €2.98 billion hybrid
equity-linked securities, known as CASHES, which UniCredit issued
in 2008. The Italian bank confirmed the complaint but stated it
would not comment further on the issue.
Caius has disclosed it had a trading position in UniCredit
without giving details. The Financial Times, which first
reported Caius’s letter to the EBA, said the hedge fund had taken
a bet against the CASHES. 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 26 July, Caius said it was not taking
further legal or regulatory action currently regarding the CASHES
as the EBA continues ongoing monitoring.
