Italy's second-biggest bank UniCredit (CRDI.MI) said on Thursday it had repurchased 1 billion euros' ($1 billion) worth of its own shares, meeting its payout goals for the year.
UniCredit gained supervisory approval for the second buyback in September, when the European Central Bank judged its capital buffers sufficiently robust to withstand a reduction as Europe's economy heads towards a recession.
But since then the economic outlook has darkened and the ECB has stepped up scrutiny of banks' payout plans to make sure they take properly into account recession risks.
Supervisors are concerned that banks' risk models are ill equipped to process the threat from inflation and that the models could also be affected by governments' COVID-19 support measures which have kept default rates low in the past two years.
It had done the same after repurchasing 7.4% of its capital with a first buyback earlier in the year.
CEO Andrea Orcel, after walking away from a possible takeover of Monte dei Paschi di Siena (BMPS.MI) to boost UniCredit's domestic market share, has bet on capital distribution to drive the bank's share price higher.
A year ago he pledged to return more than 16 billion euros to investors in dividends and share buybacks by 2024, starting with 3.75 billion euros over 2021 results.
In presenting third-quarter results, Orcel said conditions were there to "create a solid base for distribution of at least the same as for 2021" the following year, "pending fourth quarter dynamics, supervisory and shareholders' approval."
Orcel has said he expects to meet the majority of its three-year payout goal of more than 16 billion euros even in a "severe recession."
