Unicredit shares down more than five per cent as Italy's biggest bank kicks off Italy's largest ever rights issue

Hayley Kirton
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Italy's largest-ever rights issue began today (Source: Getty)

Unicredit shares are currently trading down more than five per cent after Italy's biggest bank kicked off its bumper €13bn (£11.2bn) rights issue this morning.

The rights issue, which is the country's largest ever, forms part of a wider turnaround plan announced by Unicredit's relatively new chief executive Jean Pierre Mustier late last year to bolster the lender's balance sheet, which will also see up to 14,000 jobs being shed by 2019 and €17.7bn in bad debts being ditched.

Unicredit is offering 13 new shares for €8.09 each for every five shares already owned. This price represents a 38 per cent discount on the value of the stock.

Read more: Monte dei Paschi boss to produce new business plan by February

Shares in the bank are trading down 5.3 per cent at €12.41 at time of writing. The share offer is due to close by 10 March at the latest.

The bank is also due to publish its full-year results on Thursday, although it has already announced it will be posting a loss of around €11.8bn.

Unicredit is far from the only bank in Italy facing struggles at the moment, as the sector is currently weighed down by billions of euros worth of non-performing loans.

Read more: Monte shares close down 12 per cent on reports bailout has flopped

Just before Christmas last year, a private-sector rescue plan for Italy's third largest lender, Monte dei Paschi di Siena, collapsed.

The European Banking Authority's stress tests for 2016 revealed Monte dei Paschi's capital would be wiped out in the event of a serious economic downturn, while Unicredit was one of the weaker of the the 51 European banks tested.

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