UniCredit rights issue suspended

MILAN - Reuters

Shares in UniCredit fell again yesterday 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 lost 37 percent since it priced its 7.5 billion euro ($9.5 billion) capital increase at a steep discount last week.

Yesterday, the first day of the rights issue, they were temporarily suspended for excessive losses at 8:13 a.m. They were trading down 1.3 percent at 2.5880 euros at 9:14 a.m. GMT, after falling as much as 7 percent.

Rights, which began trading separately yesterday, were suspended and indicated down 37.5 percent, pointing to little investor appetite for the fund-raising operation.

Since pricing the rights issue last week, the bank’s market capitalization has dived from 12.2 billion euros to 7.68 billion euros, 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.

The Milan-based lender is the first big European bank to launch a share offer since the tougher capital requirements were introduced.