UniCredit Applies Danish Compromise for Insurance Holdings After ECB Approval
ECB Authorises UniCredit to Use Danish Compromise for Insurance Holdings
Background on the Danish Compromise
MILAN, Sept 8 (Reuters) - UniCredit has received the European Central Bank's authorisation to apply more favourable rules known as the 'Danish Compromise' to calculate the impact of its insurance holdings on its capital reserves, the Italian lender said on Tuesday.
How the Danish Compromise Works
The so-called Danish Compromise allows banks to risk-weight their insurance investments rather than deduct them in full from capital.
Origins and Permanence of the Measure
Originally introduced as a temporary European Union arrangement during Denmark's rotating EU presidency, the measure was later made permanent.
Impact on UniCredit's Capital and Strategy
UniCredit said it would start applying the new method from the third quarter and expected it to add half a percentage point to its core capital ratio.
Internalisation of Insurance Business
Under a push to boost the bank's fee income, UniCredit Chief Executive Andrea Orcel last year completed the internalisation of the bank's domestic life insurance business after buying out partners CNP Assurances and Allianz.
Reporting Credits
(Reporting by Valentina Za, editing by Giulia Segreti)
