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UniCredit To Pay $1.3 Bln To Settle U.S. Sanctions Investigation

Italian lender UniCredit SpA (UCG,UNCFF.PK) announced that the company and its subsidiaries, UniCredit Bank AG or UCB and UniCredit Bank Austria AG or UCBA have agreed to pay penalties totaling approximately $1.3 billion after reaching settlement agreements with U.S. and New York authorities.

The settlement was related to the Banks' historical compliance with U.S. economic sanctions and related New York state laws in the period from 2002-2012. The banks also agreed to implement certain remedial policies and procedures.

As part of the settlements with the Board of Governors of the Federal Reserve System and the New York State Department of Financial Services or DFS, the Banks agreed to pay a joint civil monetary penalty of approximately $157.8 million and $405 million, respectively.

UniCredit, UCB, and UCBA have each entered into separate agreements with the Office of Foreign Assets Control of the U.S. Department of the Treasury. After crediting penalties paid to other federal agencies, UCB will pay a civil monetary penalty to OFAC of approximately $105.9 million.

Separately, UCB has agreed to enter a plea of guilty in U.S. federal court for a single charge of conspiracy and in New York state court for two charged violations of New York law in connection with violation of economic sanctions against certain countries, including Iran. The bank will pay approximately $633 million.

UniCredit noted that these amounts owed by each of the Banks are entirely covered by provisions. The final settlement amount will lead to a release of provisions in the first quarter with an after tax positive P&L impact of approximately 300 million euros.

It will have a positive impact on the company's CET1 ratio of approximately +8.5 bps.

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