UniCredit kicks off record $14bn cash call to rebuild capital

MILAN: UniCredit began Italy’s biggest corporate share sale on Monday in an attempt to raise €13 billion ($14 billion) to rebuild the bank’s capital after a balance sheet clean up.
Banks in Italy have been struggling to deal with bad loans left behind by a deep recession, leading to a series of capital raisings and consolidation in the sector as Rome tries to steady confidence in the sector.
UniCredit said last week it will post an €11.8 billion loss for 2016 due to one-off hits stemming mainly from loan writedowns, as it prepares to offload €17.7 billion in bad debts under a restructuring plan outlined in December.
This follows the hiring by Italy’s biggest bank by assets of French investment banker Jean Pierre Mustier as its new chief executive in July, with a brief to address long-standing concerns about UniCredit’s weak capital base. As part of the wider restructuring, UniCredit said on Saturday it had agreed with unions 3,900 lay-offs in Italy as part of its plan to cut 14,000 staff by 2019.
By 1053 GMT shares in UniCredit had fallen 2.4 percent to €12.78, against a 1 percent drop in Italy’s banking sector .
Rights to buy into the cash call, Europe’s largest since 2010, fell 7.5 percent, which a Milan-based trader said was a smaller-than-expected drop. A second trader confirmed both the stock and the rights were holding up well.