The direct and indirect exposure of Italian banks to the subprime mortgage crisis in the United States is "very limited", according to the American investment bank Morgan Stanley.
A study by bank analyst Guglielmo Zadra said that Italian banks Indesa San Paolo had a very low exposure to the high risk mortgages while Unicredit's exposure was no cause for alarm.
The American bank warned that the crisis on international markets brought on by the crash crunch for the subprime funds will continue despite the move by the American Federal Reserve bank to cut its discount rate in order to pump cash into the market.
Unicredit is the most exposed of Italian banks to the subprime crisis following its acquisition of the German bank HVB. The bank's recent acquisition of Capitalia did not aggravate its exposure.
Unicredit's exposure is through its bonds guaranteed by mortgages and risk-coverage derivatives.
Subprime funds grant mortgages and loans to higher risk borowers who do not qualify for the prime rate. Higher interest is charged on these loans but they are at more risk of default.
