UCG Unicredit Spa

By Giovanni Legorano 

MILAN--- UniCredit SpA said Monday that it reached an agreement to sell its Ukrainian unit, Ukrsotsbank, to Alfa Group's ABH Holdings SA, in a transaction likely to cost the bank about EUR852 million ($930.8 million).

The Italian bank said the deal reached will lead to a charge of roughly EUR200 million the bank will book in its earnings for the fourth quarter of last year, as a net result of the sale.

UniCredit said it would also be hit by a foreign-exchange charge once the deal is closed of around EUR652 million because of the depreciation of the Ukrainian currency. The bank said it expects to close the deal this year, after obtaining regulatory approvals.

The charges won't affect the bank's capital position, as they will have a neutral effect on UniCredit's common equity Tier 1 ratio--a measure of banks' capital solidity--because of the reduction in the lender's risk-weighted assets.

In the transaction, UniCredit said it would contribute its exposure in Ukrsotsbank to ABH Holdings in exchange for new shares representing a 9.9% stake in ABH Holdings after the transaction.

The sale of Ukrsotsbank is part of UniCredit's strategic plan aimed at avoiding raising fresh capital by cutting costs and shedding noncore assets.

Under the plan, UniCredit is targeting a net profit of EUR5.3 billion in 2018 and a common-equity Tier 1 capital ratio of 12.6%.

To achieve these targets, it said it would cut as many as 18,200 jobs. About 6,000 cuts will come from the sale of Ukrsotsbank and the planned tie-up of its asset manager Pioneer and Santander Asset Management.

Write to Giovanni Legorano at giovanni.legorano@wsj.com

(END) Dow Jones Newswires

January 11, 2016 15:18 ET (20:18 GMT)

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