UniCredit seeks funds in about-turn with investors
MILAN (Reuters) - UniCredit, Italy's second-biggest bank, will ask shareholders for 3 billion euros ($4.16 billion) in funds in a turn-about on promises, and offer shares instead of a cash payout this year as it tries to hike capital ratios.
In a statement after a 5-hour special board meeting on Sunday, the buffeted bank said it now expected earnings per share this year of 39 euro cents before the capital increase, down from a previous forecast of 52 euro cents.
UniCredit's shares were pummelled last week on investor concerns that it would ask them for cash and worries it would struggle without that to reach a Core Tier 1 ratio of 6.2 percent this year. It said Sunday's plan should bring that ratio to around 6.7 percent.
As recently as Friday, a senior executive was still ruling out a capital increase or a cut in the dividend.
A gloomy looking Profumo left the bank's headquarters without commenting on Sunday. He will host a conference call on Monday at 0600 GMT.
Italian regulators stepped in to ban short-selling last week after UniCredit's stock lost over 20 percent in two trading sessions, and Prime Minister Silvio Berlusconi said he would not allow speculative attacks on the country's banks.
Berlusconi let slip the possibility of a cash call on Saturday, when he said after a crisis meeting of European leaders in Paris that a capital increase at the bank "is not a worry but another guarantee" of its good management.
On Sunday, he said Italy would propose a Europe-wide bailout fund for banks at this week's meeting of European finance ministers for 3 percent of gross domestic product, Italian news agency ANSA reported.
DOMESTIC ISSUES
Once touted as a beacon among Italian banks for its modern, international profile, UniCredit surprised the market last year when it jumped in to buy Capitalia, making it at the time the biggest domestic lender ahead of Intesa Sanpaolo .
Since then, Profumo has found himself increasingly bogged down in domestic issues, culminating last month in a row over control at Mediobanca, where UniCredit is the biggest shareholder, with the investment bank's chairman, Cesare Geronzi.
Geronzi, who took the post at Mediobanca after he sold Capitalia to UniCredit under the nose of his then chief executive, had wanted to oust management from the board. But Profumo insisted that they stay.
Mediobanca advised UniCredit on the capital raising plans beside Merrill Lynch and UniCredit MIB.
UniCredit said on Sunday giving shares instead of a cash payout for its dividend this year would give it 3.6 billion euros toward capital. It paid out 26 euro cents last year on its 13.345 billion ordinary shares.
As a back-up to the capital increase, UniCredit said it was looking at a placement of a 3 billion euros issue of convertible equity instruments with a group of institutional investors, the size of which would depend on take-up of the share offer.
UniCredit said it would issue 973 million new shares at 3.083 euros each -- equal to the closing price on Friday.
UniCredit said last week it was making asset sales such as real estate which would boost its Core Tier 1.
It also has around 4.7 percent in insurer Assicurazioni Generali and a 3.35 percent holding in toll road operator Atlantia which it could sell.
For details on UniCredit's capital raising plans, double click on
(Additional reporting by Gianluca Semeraro and Svetlana Kovalyova, writing by Jo Winterbottom; Editing by Kenneth Barry)