UniCredit prices €4bn rights issue

ITALY’S biggest bank UniCredit yesterday priced its €4bn (£3.6bn) rights issue at €1.589 a share, a 29 per cent discount, in a move to shore up lagging capital ratios.

UniCredit, the Italian bank most pummelled by the credit crunch, is carrying out its second capital increase in a year, the latest in a raft of crisis-hit lenders raising capital.

UniCredit will issue three ordinary shares for every 20 ordinary and/or saving shares held, it said in a statement after a board meeting set details for the capital increase.

The capital increase will run from 11 to 29 January in Italy and Germany and from 14 to 29 January in Poland.

UniCredit, the biggest bank in eastern and central Europe, has said the capital increase will boost its Core Tier 1 ratio, a standard of capital held against risky assets, to 8.39 per cent. The figure was 7.55 per cent at the end of September, at the low end among European banks. “The risk/reward ratio for UniCredit is definitely more positive now. It’s a huge difference from a year ago,” said Santander analyst Carlos Garcia.

The discount of about 29 per cent to the theoretical ex-rights market price is in line with the roughly 27 per cent discount given by French banks Societe Generale and BNP Paribas when they raised capital to pay back state support last autumn.