The bleeding in the European bank sector continues unabated.

Italian bank UniCredit SpA announced it will slash 5,000 jobs and conduct a 7.5 billion euro ($10.3 billion) rights offering –the biggest among European banks in a year -- in response to a disastrous third quarter which saw its profit wiped out and its capital position fall to alarming levels.

UniCredit posted a huge net loss of 10.64 billion euros ($14.54 billion) in the quarter, principally due to a write-down on Greek bond holding and other goodwill write-downs. In the year-ago quarter, the bank recorded a profit of 334 million euros ($456 million).

Reuters reported that the bank will close down its London-based equity sales and trading business and likely hold the huge rights offering in the first quarter of 2012.

The bank needs to reach the 9 percent Core Tier 1 mandate recently established by the European Banking Authority.

UniCredit chief executive Federico Ghizzoni apparently wants the bank it refocus its activities in its core retail and corporate banking operations in areas including Italy, Austria, Germany, Poland and Turkey.

The bank is also heavily exposed to Italian sovereign bonds -- holding about 38 billion euros.

Reuters noted that another problem is that 7.5 percent of the bank’s shares are held by Libya's central bank and sovereign wealth fund -- due to sanctions applied to Libya during that country’s civil war, these assets remain technically frozen.

The bank will vote on a rights offering in mid-December, the Wall Street Journal reported. However, interesting in such a sale may be difficult, the Journal said, citing that the company’s stock has plunged by more than 50 percent over the past year.