Just days after UniCredit CEO Andrea Orcel joined roughly two dozen other Italian captains of industry for a virtual meeting with Russian President Vladimir Putin, the Italian banking executive said during an earnings call Friday morning that Italy's largest lender had decided to abandon its pursuit of Russian bank Otkritie, blaming the situation in Ukraine.
UniCredit's pursuit of the deal had been reported earlier this month by Reuters and others. Right off the bat, European regulators (including the ECB) apparently interpreted the news as a sign of disrespect toward NATO, and the central bank reminded UniCredit of the severe economic sanctions that could apply should Putin make a move. A few days ago, Reuters added that plans for a buyout were on the rocks, and that UniCredit was now "unlikely" to pursue the deal with the Moscow-based lender.
Now, UniCredit is reassuring its shareholders that the deal is dead due to the "geopolitical environment".
"Given the geopolitical environment we decided to withdraw from the data room," Orcel said Friday.
To be clear: UniCredit's decision to abandon the deal means it has decided that now is not the time to expand its business in Russia. The Italian lender has been doing business in Russia since 1989 (before the fall of the Soviet Union) and it continues to operate a brisk business in the country.
Given it's exposure to Russia, UniCredit included a detailed warning about the potential blowback it might face from conflict in Ukraine.
"The negative economic impact is expected to mainly come from a potential energy shock, especially for countries more vulnerable such...