By Valentina Za
MILAN (Reuters) - UniCredit (LON:0RLS) is not under pressure to raise the interest rates it pays on retail deposits, which account for about 60% of its deposit base and are "very sticky", Chief Executive Andrea Orcel said on Wednesday.
Addressing a Morgan Stanley (NYSE:MS) banking conference in London, Orcel generally dismissed concerns about European banks after the failures of U.S. peers Silicon Valley Bank and Signature Bank.
"Most banks have liquidity ratios that are off the charts," he said, adding that the European Central Bank would only be forced to intervene in case of a "dramatic dislocation" which at present there is no reason to fear.
A stable deposit base is widely seen as one of the bulwarks protecting European banks from the issues faced by the two failed U.S. lenders.
Large European banks, Orcel said, "have been holding the line" on 'deposit betas', meaning the percentage of interest rate rises that are passed on to customers as the ECB increases the cost of credit.
In answer to a question on the fallout from the SVB crisis, Orcel said the bank faced "absolutely no pressure" to shift its stance regarding retail deposits.
It has, however, already passed higher rates on to corporate clients and will continue to do so this year.
"The impact we've had from corporate has already bled through and we are anticipating the final bleed ... this year. And the rest is very, very, very stable," he said.
"Now people are probably more worried about making sure that [money]'s there and safe" rather than seeking higher rates by moving their current account, he said.
Orcel's comments echoed those of Intesa Sanpaolo (BIT:ISP) Finance Chief Stefano Del Punta who on Tuesday told the same conference that Intesa (LON:0HBC) was not repricing retail deposits, but offered instead money market products.
Like UniCredit, Intesa differentiates between retail and corporate clients and it is paying the Euribor rate to its main large corporate clients after charging them a negative 50 basis points on their deposits in past years.