Euroclear to provide UniCredit with access to Eurosystem liquidity via its Triparty platform
Agreement marks an industry first, following recent changes to the Correspondent Central Banking Model rules
Brussels and Milan, 3 December 2014 – Euroclear today announced that UniCredit, a leading European commercial bank, has become the first institution to secure its Eurosystem credit operations through an agreement with Euroclear Bank and the National Bank of Belgium (NBB). Through the agreement, Euroclear - acting as triparty collateral agent - will facilitate the pledging of securities collateral to Eurosystem central banks through its partnership with the NBB, acting as correspondent central bank.
This ‘industry first’ takes advantage of the recent changes in Eurosystem rules that allow central banks to provide Eurosystem liquidity via a triparty platform.
Through Euroclear’s agreement with the NBB, UniCredit will also be able to take advantage of the May 2014 abolishment of the ‘repatriation rule’. This long-standing part of the correspondent central banking model (CCBM) required Eurosystem counterparties to realign securities to their place of issuance prior to pledging them as collateral against cash liquidity. Following changes implemented by the Eurosystem, banks will be able to reduce the cost and operational burden associated obtaining liquidity from Eurozone central banks.
Massimiliano Sinagra, Co-Head of UniCredit Group Treasury, said: “We greatly appreciate the results of this joint effort with Banca d’Italia, the National Bank of Belgium and Euroclear Bank. This agreement will help UniCredit reduce its operational risk and lower the cost of pledging collateral to Banca d’Italia in exchange for cash. By using Euroclear’s proven triparty infrastructure, UniCredit will be able to pledge securities through the National Bank of Belgium, which will liaise directly with Banca d’Italia, in order to provide the bank with cash liquidity”.
Jo Van de Velde, Managing Director and Head of Euroclear’s Product Management division, commented: “As a profit-moderated market infrastructure dedicated to reducing risks and improving transparency, we applaud UniCredit’s decision to select Euroclear as their triparty agent for Eurosystem liquidity. Our resilient collateral management platform will serve as the gateway for UniCredit to pledge securities collateral to the National Bank of Belgium in favour of Banca d’Italia, without the need for complex cross-border realignments.”
Historically, banks were obliged to realign securities collateral positions to their central securities depository (CSD) of issuance. This was a time-consuming operational process, often laden with inefficiency.
Mr Van de Velde continued, “Furthermore, by being part of the global Collateral Highway eco-system, UniCredit will also be able to seamlessly track and mobilise their securities collateral in a timely manner, irrespective of geographic location, to wherever it is needed in order to support regular trading activity.”
Jean Hilgers, Director of the National Bank of Belgium said: “We are extremely pleased to contribute to the improvement of the efficiency and the reduction of risk for the European capital markets. By using Euroclear’s triparty platform Eurozone banks will now be able to pledge eligible securities, from the nine major markets with which Euroclear Bank has a Eurosystem eligible link, with the National Bank of Belgium in order to obtain liquidity from their domestic central bank.“
Note to editors
Euroclear is one of the world's largest providers of domestic and cross-border settlement and related services for bond, equity, ETF and other mutual fund transactions with offices in 15 countries across the globe and links to 46 international markets.
Euroclear is a proven, resilient capital market infrastructure committed to delivering risk-mitigation, automation and efficiency at scale for its global client franchise which includes over 100 central banks and supranationals.
The Euroclear group includes Euroclear Bank, which is consistently rated AA+ by Fitch Ratings and AA by Standard & Poor's, as well as Euroclear Belgium, Euroclear Finland, Euroclear France, Euroclear Nederland, Euroclear Sweden and Euroclear UK & Ireland. The group settled the equivalent of $789 trillion (€572 trillion) in securities transactions in 2013 representing 170 million domestic and cross-border transactions, and held over $33.3 trillion (€24.2 trillion) in assets for clients.