MILAN/ROME (Reuters) - Shareholders in UniCredit (CRDI.MI) approved a record 13 billion euro ($14 billion) share issue on Thursday, needed to allow Italy’s biggest bank to clean up its balance sheet and restructure under new chief executive Jean Pierre Mustier.
In an effort to distance itself from Italy’s protracted banking crisis, UniCredit unveiled last month a plan to offload 18 billion euros in bad loans and cut 14,000 jobs.
Italy’s biggest corporate cash call was approved with 99.6 of votes by shareholders representing over half the bank’s capital.
Mustier pledged on Thursday to complete the issue, which nearly matches the bank’s market value, by March 10, in time for UniCredit to make coupon payments on some high-risk bonds which came under pressure in the market.
Answering a request by market watchdog Consob, UniCredit warned one-off fourth-quarter charges totaling 12 billion euros could make it hard to pay coupons on Additional Tier 1 (AT1) bonds due in March if it did not carry out the share issue.
The warning weighed on the bank’s two outstanding AT1 bonds on Thursday, pushing yields up XS1046224884=R XS1107890847=R from Wednesday’s close.
UniCredit can temporarily write down the value of its AT1 bonds if its core capital falls below a certain threshold. It can also cancel their coupon payments at any time.
However, Mustier told La Stampa daily that the bank would not have to do so.
“It (the share issue) will be completed in time for the UniCredit bond payment on March 10,” he said.
At Consob’s behest, UniCredit also clarified that the cash call had not been requested by European Central Bank supervisors, as was the case for rival Monte dei Paschi di Siena (BMPS.MI), which was bailed out by the state last month after failing to find buyers for its stock.
Economy Minister Pier Carlo Padoan said on Thursday he was confident about UniCredit’s cash call.
Unlike Monte dei Paschi, UniCredit has found a group of investment banks to take on any unsold shares.
Mustier rejected the idea that a rival lender could use the cash call to build a stake in UniCredit. He also sought to dismiss long-standing concerns about a possible takeover of Italy’s top insurer Assicurazioni Generali (GASI.MI) by French rival AXA (AXAF.PA).
UniCredit is the top shareholder in Mediobanca, which in turn is Generali’s biggest investor.
Speculation that AXA may be interested in Generali has surfaced amid mounting concerns in Italy that more companies would fall prey to French rivals after Vivendi (VIV.PA) became the biggest shareholder in Telecom Italia (TLIT.MI) and, more recently, aggressively built a large stake in broadcaster Mediaset (MS.MI).
“Let’s put a stop to this paranoia,” Mustier said of the speculation in the newspaper interview.
The appointment of Frenchman Philippe Donnet as CEO of Generali and the arrival of Mustier, who is also French, at UniCredit have further stoked speculation.
“For me, as an ‘Italian citizen’, Generali is crucial for the country ... Generali must remain Italian, Mediobanca must preserve the insurer’s independence,” Mustier said.
Reporting by Valentina Za; Editing by Ruth Pitchford and Susan Fenton