UniCredit says Q1 writedowns to be 650 mln euros

By Christian Kraemer and Jo Winterbottom

MUNICH/MILAN (Reuters) - Europe's No. 3 bank UniCredit will write down some 650 million euros on asset-backed securities in the first quarter, it said in a statement reacting to comments from the head of its HVB unit that had hit shares.

The bank (CRDI.MI: Quote, Profile, Research) also said on Wednesday it would have a trading loss of about 675 million euros ($1.08 billion) in the quarter but a consolidated profit of around 1 billion euros "given the excellent performance of other activities."

Earlier, the chief executive of its German HVB (HVMG.DE: Quote, Profile, Research) unit had warned HVB would make "significant" first-quarter writedowns, sending UniCredit shares down sharply on worries over the extent of possible damage from market turmoil.

"The situation on the financial markets has clearly got worse and the credit spreads have become wider since the beginning of the year," Wolfgang Sprissler, CEO of Bayerische Hypo-und Vereinsbank AG (HVB), told reporters late on Tuesday in remarks embargoed for Wednesday.

"This situation will bring for us too significant writeoffs on our securities portfolio in the first quarter," he said.

UniCredit said trading income was also hurt by about 350 million euros by the widening spreads on bonds and the "dislocation" of the spread between credit default swaps and underlying cash bonds.

Analysts had said before the statement they were expecting writedowns for mark-to-market of around 600 million euros in the quarter for UniCredit.

"We were looking at 500 to 600 million euros on mark-to-market two to three weeks ago. I don't call that a sizeable writedown," said one analyst who asked not to be identified.