MILAN (Reuters – UniCredit has the ability to withstand volatility of Italian government bonds. The group’s chief finance officer said Wednesday that UniCredit was well positioned, despite concerns over the effects of a recent increase in spreads with German Debt.

Premium Italian Bonds are now more expensive than safer German Bunds. This is because the European Central Bank (ECB), which is tightening its loose policy that has helped indebted countries of southern Europe, hit a 2-year high.

Italian banks hold large amounts of government debt and are therefore vulnerable to falling prices. This can lead to a reduction in their capital buffers.

UniCredit’s Chief Financial Officer Stefano Porro stated Wednesday that the company had received more than 55% ($44 billion) of its 41 Billion Euro ($44 billion), in Italian government bonds, and other assets “held for collection” (HTC).

HTC’s accounting classification of bonds helps to prevent swings in market prices from effecting lenders’ capital ratios.

Porro spoke at the 26th annual European Financials Conference, Goldman Sachs (NYSE :), in Rome. He stated that a 10-basis point increase in the spread of Italian bond asset swaps had only 2 basis points shaved off UniCredit’s core capital ratio.

He stated that “In terms of sensitiveness… it’s not an important one.” “And, we are not anticipating any meaningful changes in our exposure, both in the whole portfolio and in the Italian government portfolio.”

Porro stated that he didn’t anticipate a structural increase in Italian bond spreads. He stressed that foreign investors only held a fifth and the ECB was ready to combat unwarranted fragmentation of funding conditions between eurozone countries.

When asked about the effect of rising interest rates on bank assets quality, the CFO stated that almost 30% of bank’s corporate loans in Italy were state-guaranteed loans.

($1 = 0.9314 euros)