MILAN (Reuters) - The board of UniCredit (CRDI.MI), Italy’s biggest bank by assets, will discuss on Wednesday the terms of a 7.5 billion euro capital increase aimed at shoring up its financial strength, a source close to the bank told Reuters.
UniCredit faces a 7.97 billion euro capital shortfall — the second biggest in Europe after Spain’s Santander (SAN.MC) — to meet tougher requirements set by the European Banking Authority to protect the region’s lenders from a spreading debt crisis.
If the board sets a price for the rights issue on Wednesday, the cash call could be launched as soon as January 9. Il Messaggero daily reported on Wednesday that the discount to the theoretical ex-right price should be above 40 percent.
UniCredit announced the rights issue in November, together with 6,150 job cuts and a retreat from key business operations to repair its balance sheet after revealing a 10.6 billion euro third-quarter loss due to massive writedowns.
It is the third capital increase for the bank since 2008. UniCredit’s shares have lost more than half of their value in the past year as Italy was sucked into the euro zone’s debt crisis. They closed down 2.5 percent at 6.33 euros on Tuesday.
The rights issue, which will be the largest for the European banking sector in over a year, represents more than half of the bank’s current market capitalization of 12.5 billion euros.
Reporting by Gianluca Semeraro; Editing by David Cowell