MILAN, Jan 28 (Reuters) - UniCredit CEO Andrea Orcel confirmed on Friday the Italian bank had dropped a potential deal targeting Russian bank Otkritie, but was happy with its presence in the country.

Reports of UniCredit's interest for the bailed-out Russian lender, which the central bank is looking to reprivatise through a public listing, had hurt the Italian bank's shares https://www.reuters.com/markets/europe/unicredit-shares-fall-further-interest-russias-otkritie-2022-01-12 at a time of mounting tensions over Ukraine.

Confirming a report in the Russian press, a source had told Reuters this week UniCredit would not go ahead https://www.reuters.com/business/finance/unicredit-shares-rise-1-report-lost-interest-russias-otkritie-bank-2022-01-24 with the deal.

CEO Andrea Orcel confirmed on Friday in a newswire call the acquisition had been halted.

"We were evaluating the possibility of contributing our Russian operations into Otkritie in exchange for a controlling stake ... in the planned IPO," Orcel said.

The former UBS investment banker said that UniCredit's exposure to the country would not have increased significantly in this way, but the combination offered scope for synergies and provided a better market positioning.

"Given the geopolitical environment we decided to withdraw," he said.

He added UniCredit's operations in Russia, where it ranks as the 12th-largest lender, provided returns that had always been in line or above the local cost of equity.

"We're generally happy with it and committed to it," he said adding that the Russian business did not meaningfully affect UniCredit's risk profile being less than 5% of group equity. (Reporting by Valentina Za; editing by Agnieszka Flak)