UniCredit, the Italian bank in which the Abu Dhabi sovereign wealth fund Aabar has a 5 per cent stake, began selling shares to existing shareholders in a rights issue that aims to raise €13 billion (Dh51.3bn) for the ailing lender.
It was not yet clear, however as of late afternoon in Abu Dhabi, whether the wealth fund had participated in the cash call. If Aabar or other shareholders do not buy the shares they are entitled to, they stand to lose 70 per cent of their existing shareholding through dilution.
No one at Aabar was immediately available to comment.
UniCredit is offering 13 new shares – at a price of €8.09 each – for every five ordinary or savings shares already owned. It is being offered at a 38 per cent discount to the value of the stock, excluding subscription rights. The share offer is due to end by March 10, when a coupon payment is due on some high-risk bonds that the bank would not be able to honour without lifting its capital back above regulatory thresholds.
UniCredit has been buffeted by faltering growth in Europe, bad debts in Italy and its exposure to the Russian market and the weak rouble. It has, however, been taking measures to improve its financial situation.
The bank last year agreed to sell its asset management arm Pioneer to France’s Amundi for €3bn, a move that will help to boost its capital. Last week, the Italian lender also announced that it had struck a deal with trade unions to cut 3,900 jobs.
Aabar, which has a diversified investment portfolio, is owned by International Petroleum Investment Company. The fund took its original 4.99 per cent stake in UniCredit in 2010, when it was valued at about $2.3bn.
UniCredit’s woes come amid broader problem’s for Italy’s banks. Italian banks have been weighed down by rising bad debt, estimated to be as high as €360bn, and a number have been planning to clean up their books.
mkassem@thenational.ae
* with Reuters
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