banking syndicate managing its €7.5bn (£6.4bn) rights issue, accusing them of being too demanding in negotiating the terms of the deal.
Until last week Goldman Sachs and Morgan Stanley were both set to participate in the rights issue, one of the biggest European deals for months. Their exclusion is a major blow given the slow market and a lack of deals.
According to four sources, the two banks were determined to change the structure of the deal to give themselves a hand in determining whether it should be terminated in the event of markets collapsing.
They were also unhappy with the way the syndicate was put together, which one source said was unusual and went against typical procedures for American investment banks.
Goldman, in particular, is used to heading syndicates and was not content to rely on Bank of America Merrill Lynch and Mediobanca, the lead advisers, to judge the deal’s riskiness. Goldman and Morgan Stanley suggested the so-called “termination rights” should rest with a majority of the bookrunners instead. But this request was turned down.
“These two banks wanted to have their hand on the nuclear button and I think they didn’t reckon Unicredit would stand up to them,” one source said. Others said that negotiations with Goldman and Morgan Stanley just ran out of time, with Unicredit pinned to a strict timetable to announce the details of the share issue by yesterday morning.
The Unicredit issue is being viewed as especially difficult because of the volatile market conditions in Italy and the Eurozone and the long lead time before it goes through early next year.
Goldman and Morgan Stanley were said to have been supported by JP Morgan in their quest for greater control. JP Morgan was also initially left out of the syndicate by Unicredit but a flight out to Milan on Friday appears to have retrieved the situation.
The syndicate has decided to use a form of volume underwriting whereby banks agree to take specific quantities of shares before they are priced.