UniCredit's Successful Defense of Regulatory Capital Instruments

July 20, 2018

Cleary Gottlieb represented UniCredit in its successful defense of regulatory capital instruments.

Through a series of public letters dated May 2018 and June 2018, London-based hedge fund Caius Capital requested the European Banking Authority (EBA) to open an investigation into a possible breach of EU law by the European Central Bank (ECB) for having approved the prudential treatment of the shares of UniCredit as Common Equity Tier 1 (CET1), despite the existence of the so-called “CASHES” instruments.

In a decision dated July 20, 2018, the EBA declined to open a formal investigation, on the basis that there was no clear breach of EU law by the ECB, and confirmed its 2012 assessment of the prudential treatment of the CASHES.

The EBA’s decision validates UniCredit’s previous statement that the treatment of the CASHES has been reviewed and affirmed by all the relevant authorities and that UniCredit ordinary shares are to be qualified as CET1 capital.

UniCredit has announced that it notified the competent market authorities of Caius Capital’s actions in light of possible market abuse and that it is evaluating any other recourse to protect its stakeholders, shareholders, and bondholders.