Bloomberg News

UniCredit Rights Fall as Trading Starts; Shares Extend Drop

January 09, 2012

(Update with closing share price in second paragraph.)

Jan. 9 (Bloomberg) -- UniCredit SpA rights tumbled in the first day of trading in Milan, adding pressure on the bank’s 7.5 billion-euro ($9.6 billion) stock sale. The shares extended their 38 percent decline from last week.

The rights, which entitle holders to buy two new shares each in Italy’s largest bank for 1.943 euros, traded at 47 euros cents, 65 percent lower than their indicative price at the end of last week. The shares, which were suspended for volatility at least four times, fell 14 percent to 2.29 euros, the lowest since December 1988.

“It doesn’t look like there are that many investors happy to position on the rights at the moment,” analysts at Fidentiis Equities wrote in a note to clients today. “Suspensions will continue most of the day in our view.”

Investors dumped UniCredit stock last week as the lender announced details of its share sale, which comes as Italian bond yields trade close to a record high. The new shares were offered at a discount of 43 percent to the Jan. 3 closing price. The issue will dilute per-share earnings by an average of 67 percent in the next two years, Natixis SA analysts have estimated.

Banco di Sicilia foundation, which owns less than 1 percent of UniCredit, won’t take part in the share sale, la Repubblica newspaper reported yesterday, citing Chairman Giovanni Puglisi. He said it’s “inevitable” that new investors will buy shares during the lender’s capital increase, according to the Repubblica report.

Crisis Fallout

Investors including Fondazione CRT, Allianz SE and Carimonte Holding have already said they will subscribe to their rights for 14 percent of the offer, the lender said in a statement last week. Shareholders accounting for another 10 percent of the offer have initiated procedures to participate, without making any binding commitments, the bank said last week.

The lender’s discount reflects a deepening in Europe’s sovereign-debt crisis, Chief Executive Officer Federico Ghizzoni told Il Sole 24 Ore in an interview Jan 5. The yield on Italy’s 10-year bond has increased more than 200 basis points since August over concerns that Italy may be the next victim of the debt crisis.

At 2.29 euros a share, the rights now give access to UniCredit’s stock at a 15 percent discount, a third of the reduction when the offer was announced. Last week’s drop eroded 4.8 billion euros of UniCredit’s market value.

“Perceptions of UniCredit’s capital-raising are intertwined with perceptions of the euro-zone crisis,” said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London. “Fears about the wall of funding this quarter, particularly in Italy, led to an exaggerated fall in the bank’s share price.”

Banca Monte dei Paschi di Siena SpA, Italy’s third-largest bank, dropped 14 percent to 19.7 cents.

--Editor: Stephen Taylor

To contact the reporters on this story: Alexis Xydias in London at Sonia Sirletti in Milan at Elisa Martinuzzi at

To contact the editor responsible for this story: Frank Connelly at

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