Italian banks battered again

 
David Hellier
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DAYS after Unicredit announced its intention to raise €7.5bn (£6.4bn) from private investors, the rights issue of its rival, Banco Popolare di Milano (BPM) ran into trouble.

BPM’s share price fell 13 per cent yesterday, dangerously close to the offer price for the bank’s €800m rights issue that closes tomorrow.

The sell-off, which might lead to the rights shares being left with the underwriters, was said to have been caused by traders taking advantage of the first opportunity they had to sell the stock that they will receive from exercising rights ahead of its delivery on Monday.

But it is a worrying sign for Unicredit, which was put on review for a downgrade by Moody’s yesterday due to its €10.6bn third-quarter loss. Its chief executive Federico Ghizzoni was said to have requested that the ECB widen the range of instruments it will accept for providing liquidity.

BPM was raising capital on orders from the Bank of Italy after a seven-month probe discovered that it needed to urgently strengthen its balance sheet.

The new shares were issued at a discount of 40.3 per cent to the price prior to the announcement but this discount has now closed almost completely, making the rights shares less attractive. The shares were trading yesterday at €3.02, versus the rights price of €3.