UniCredit mulling 10-13 billion euro share issue - sources

MILAN (Reuters) - Italy's biggest bank UniCredit CRDI.MI may seek to raise between 10 billion and 13 billion euros (8.73 billion-11.11 billion pounds) in a share issue aimed at dispelling persistent concerns about its capital base, four sources familiar with the matter said on Saturday.

The logo of Unicredit bank is seen outside of one of its UniCredit unit Bank Austria branch offices in Vienna, Austria, September 18, 2016. REUTERS/Leonhard Foeger

UniCredit, Italy’s only systemically important bank, hired French banker Jean Pierre Mustier as chief executive in July to strengthen its balance sheet as its core capital lags behind that of several large European rivals.

Mustier is conducting a strategic review of all assets and will present a new business plan on Dec. 13.

One source said the size of the share sale that Mustier is due to unveil with the plan would be “double-digit” and could reach 13 billion euros. The other three sources confirmed a 10 billion-13 billion euro cash call was being discussed.

One of them said a share issue above 10 billion euros would be welcome by regulators although top shareholders might be unable to maintain their current stakes.

In a bid to reduce the size of the cash call, Mustier has already sold a 30 percent stake in online unit FinecoBank FBK.MI and is in talks to sell asset gatherer Pioneer Investments and Polish unit Bank Pekao PEO.WA.

UniCredit said this week that asset sales had helped it raise its best-quality capital ratio to 10.82 percent of assets at the end of September, up from 10.33 percent three months earlier and above many analysts’ expectations.

However, capital is set to fall as sources have said the bank is working on a large bad loan sale needed to reduce its gross 51 billion euros in loans to defaulting borrowers.

The share issue would help UniCredit offset the hit from selling the bad loans at a price below their book value, and build a “decent buffer” above regulatory capital requirements which Mustier has said will be his goal.

The ECB has set a minimum capital threshold of 10 percent for UniCredit this year, rising by 25 basis points each year to reach 10.75 percent in 2019.

Il Messaggero daily reported on Saturday regulators now considered a 14 percent threshold more appropriate for the bank.

Writing by Valentina Za; Editing by Helen Popper