UniCredit 3-day share plunge reaches 37 percent
Credit: Reuters
* Slump comes after rights issue priced at deep discount
* Capital increase required to meet new regulation
* UniCredit issue seen as litmus test for EU banks
(Adds details)
By Silvia Aloisi
MILAN, Jan 6 (Reuters) - Shares in UniCredit (CRDI.MI), Italy's biggest bank by assets, dived for a third day as investors punished the stock after the lender priced a 7.5-billion euro ($9.54 billion) rights issue at a deep discount.
The shares closed down 11.1 percent at 3.98 euros on Friday, the last trading day before the new share offer takes effect on Monday, extending losses over the past three days to 37 percent.
Since pricing the rights issue on Wednesday, its market capitalisation has dived from 12.2 billion euros to 7.68 billion, a shade above the total amount of the new share offer.
UniCredit's rights issue is a litmus test of investor appetite 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.
To meet the new requirements, UniCredit must plug an 8 billion euro capital shortfall -- the biggest deficit for a single bank after Spain's Santander (SAN.MC). [ID:nL6E8C40II]
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.
"Everyone's selling part of their shares now to buy back through the rights at 1.943 euros," a Milan trader said.
But the three-day slump highlights the struggle European lenders face to raise funds, and may deter them from tapping the market as the debt crisis continues. [ID:nL6E8C54C4]
"After the collapse in the UniCredit share price, many banks will now be looking at other ways to raise capital," said Neil Dwane, chief investment officer in Europe for RCM, a unit of Allianz Global Investors.
The Italian stock exchange said after the close that UniCredit's share price, adjusted for the rights issue, will begin trading on January 9 at 2.622 euros.
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)
(Additional reporting by Stephen Jewkes and Michel Rose; Editing by David Hulmes)
((michel.rose@thomsonreuters.com)(+393400575240)(Reuters Messaging: michel.rose.thomsonreuters.com@reuters.net)) Keywords: UNICREDIT SHARES/
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