MILAN/ROME: The chief executive of Italy's biggest bank UniCredit pledged on Thursday to complete a 13 billion euro ($14 billion) share issue by March 10, in time to make payouts due on high-risk bonds that came under pressure on the market.
UniCredit's shareholders met on Thursday to approve Italy's biggest corporate cash call to help clean up its balance sheet and restructure under new CEO Jean Pierre Mustier, distancing itself from the protracted banking crisis.
Responding to market watchdog Consob, UniCredit on Thursday clarified the cash call had not been requested by European Central Bank supervisors.
UniCredit detailed a plan last month to offload 17.7 billion euros in bad loans and cut 14,000 jobs. It said then that loan writedowns would make up two thirds of 12.2 billion euros in one-off charges it would book in the last quarter.
UniCredit warned on Thursday that fourth-quarter charges 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 comments weighed on UniCredit's outstanding AT1 bonds. By 1340 GMT the 8 percent bond on which the coupon payment is due yielded 9.5 percent, slightly higher on the day but below a session high of 9.7 percent. A 6.75 percent AT1 bond the bank issued in December yielded 8.6 percent, up from 8.3 percent at 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. Mustier, however, told La Stampa daily that UniCredit 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.
UniCredit has found a group of banks to take on any unsold shares, unlike rival Monte dei Paschi di Siena which in December had to be rescued by Italy's government after failing to find buyers for its stock.
Mustier said the share sale had drawn interest from both Europe and the United States but ruled out that a rival bank could use it to buy a stake.
"We'll have only financial investors. Ours is a plan for standalone growth; we won't turn it into something different," he said.
PARANOIA
The French banker also sought to dismiss long-standing concerns about a possible takeover of Italy's top insurer Assicurazioni Generali by French rival AXA.
"Let's put a stop to this paranoia," he said in the newspaper interview. Concerns have mounted in Italy that more companies would fall prey to French rivals after Vivendi became the biggest shareholder in Telecom Italia and, more recently, aggressively built a large stake in broadcaster Mediaset. The appointment of Frenchman Philippe Donnet as CEO of Generali and the arrival of Mustier 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. UniCredit is the top shareholder in Mediobanca, which in turn is Generali's biggest investor.
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