Unicredit Shares Suspended Amid Capital Increase
Shares in UniCredit fell again on Monday and trading in the rights to buy into the bank's closely watched cash call were suspended, fuelling concerns that other lenders may be deterred from using rights issues to plug capital shortfalls.
UniCredit's rights issue is a litmus test for banking stocks at a time when many European lenders are under pressure to shore up their capital buffers to withstand a spreading debt crisis.
The Italian bank's shares have lost 37 percent since it priced its 7.5 billion euro ($9.5 billion) capital increase at a steep discount last week.
On Monday, the first day of the rights issue, they were temporarily suspended for excessive losses at 0813 GMT. They were trading down 1.3 percent at 2.5880 euros at 0914 GMT, after falling as much as 7 percent.
Rights <CRDI_r.MI>, which began trading separately on Monday, were suspended and indicated down 37.5 percent, pointing to little investor appetite for the fundraising operation.
Since pricing the rights issue on Wednesday, the bank's market capitalization has dived from 12.2 billion euros to 7.68 billion, a shade above the total amount of the new share offer.
To meet the new capital requirements, UniCredit must plug an 8 billion euro capital shortfall -- the biggest deficit for a single bank after Spain's Santander <SAN.MC>.
The Milan-based lender, the first big European bank to launch a share offer since the tougher capital requirements were introduced, has priced its two-for-one rights issue at 1.943 euros per share.
That represents a 43 percent discount to the theoretical ex-rights price, a much higher discount than that applied by peers in recent rights issues.
The shares are trading at their lowest since UniCredit was created in 1998 through the merger of several Italian lenders.
Analysts say the slump in UniCredit's shares highlight the challenges lenders face to raise funds, and may discourage them from tapping the market as the debt crisis continues.
The new share offer ends on January 27 and is guaranteed by a pool of 27 lenders, meaning they will take up any portion of the offer that might go unsubscribed.
($1 = 0.7865 euros)