Moving ahead on a contract that would be an improvement for the bank would help UniCredit address the challenge common to all banks now that rates have peaked: increasing fee income to offset the decline in the boost from net interest income.

As early as next year, UniCredit could take in a greater share of commissions on the sale of funds from Europe's top asset manager, the source explained. In the past, sources close to the matter had explained that the contractually guaranteed minimums at Amundi were also a knot to be addressed in a renewal.

No comment on the matter from Amundi or UniCredit.

CEO Andrea Orcel, former head of investment banking at Ubs, aims to bring Italy's second-largest bank to generate-when fully operational-1.4 billion euros in additional fees per year.

To retain a key partner in what is its largest foreign market, Amundi could consider offering UniCredit better terms, including a bigger slice of fees, sources told Reuters in late 2023.

The terms of the 10-year distribution agreement are consistent with the onerous ones agreed in 2017 when for the sale of Pioneer Investments to Amundi, UniCredit had netted a price of 3.55 billion, collecting an extraordinary dividend of 315 million from its asset manager.

When UniCredit presented its annual results in recent weeks, analysts asked whether they should expect any delays in Orcel's strategy to lead UniCredit to retain more asset management fees, as the contract with Amundi runs until 2027.

Even if the agreement ends, UniCredit would need time to gradually replace Amundi's funds in its clients' portfolios.

"We will see how our agreement with Amundi goes," Orcel said.

"I don't think it will be an all-or-nothing issue between now and 2027," he said, adding that it will be a gradual growth and that "2027 that will be an important year as one of our key agreements is being renegotiated."

UniCredit relies on Amundi for between 70 percent and 80 percent of its asset management business, Orcel said, adding that the bank was focused on "creating value" for the remaining portion, the 20-30 percent "which is, in quotes, free."

Complicating relations between the partners, past sources have reported, was the decision by Amundi's largest shareholder, Credit Agricole, to become the main investor in Banco Bpm, a smaller company that UniCredit has priced as an acquisition target in 2022.

Credit Agricole CEO Philippe Brassac expressed confidence in November that the two partners will find "a balance ... that suits both parties."

In the push for fee growth, Orcel has created an in-house team to repackage funds provided by major players under the proprietary 'onemarkets' brand.

UniCredit will also begin distributing funds provided by Azimut to its clients this year, as part of a partnership Orcel entered into in December 2022 with the Italian asset manager.

Commissions accounted for 32 percent of UniCredit's revenues in 2023, up 1 percent from the previous year, if we exclude the €235 million decline due to lower current account fees and the cost of securitization transactions.

(Translated by Laura Contemori, editing Andrea Mandalà)