UniCredit's head on Saturday expressed surprise the Italian bank's stock slid this week after the pricing of a cash call and said he looked forward confidently to Monday when the rights to buy into the 7.5 billion euro capital increase start trading.
Shares in UniCredit
The shares closed down 11.1 percent at 3.98 euros on Friday, giving Italy's biggest bank by assets a market capitalization of 7.7 billion euros, a shade above the total amount of the new share offer.
The market's reaction surprised us a little, although it is largely due to technical reasons, Chief Executive Federico Ghizzoni said in comments reported by daily Corriere della Sera.
UniCredit has priced its two-for-one rights issue at 1.943 euros per share. This is equivalent to a 43 percent discount to the theoretical ex-rights price, a much higher discount than that offered by peers in recent rights issues.
Traders have said the large discount highlighted concerns by UniCredit management that there would be scant appetite from investors for the new shares.
But Ghizzoni blamed the fall in the share price also on worries about the situation of some European countries and on decisions awaited at the European Union level.
We are confidently looking forward to the start of the rights trading phase, Ghizzoni was quoted as saying.
The market reaction to UniCredit's fundraising plan has stoked worries about similar operations at other European lenders, which must plug a 115 billion euro ($146.21 billion) capital shortfall by the end of June to comply with more stringent requirements.
Thirty-one of Europe's banks must detail their capital plans by January 20, answering a request by regulators aimed at strengthening lenders' balance sheets in the face of a deep-seated sovereign debt crisis and a weakening economy.
Ghizzoni said the timing of UniCredit's cash call allowed the bank to anticipate a phase in the market that will see many capital boosting operations.
UniCredit's rights issue, which runs from Monday to January 27, is guaranteed by a pool of 27 lenders that will take up any portion of the offer not subscribed.
What really matters is that UniCredit's 7.5 billion euro capital increase is a sure thing, Ghizzoni said.
(Reporting by Valentina Za; editing by Ron Askew)