Unicredit chief expects Vicenza cash call success

Banca Popolare di Vicenza's planned 1.5 billion euro ($1.7 billion) cash call will prove successful, guarantor UniCredit said today, after a heavy cut in the stock's value this week.

Popolare Vicenza must raise the cash by May to comply with European Central Bank (ECB) requests to meet minimum capital thresholds, having posted a 2.2 billion euros ($2.4 billion) loss in 2014-2015 due to a balance-sheet clean-up.

"The bank has worked hard to solve asset quality and balance sheet issues," UniCredit chief Federico Ghizzoni said on Thursday. "Prices are very attractive. It (the share sale) can only go well."

Banking stocks have been hit by concerns over weak global growth, low interest rates and troubled loans.

Italy's banking sector has shed 30 percent so far this year. Popolare Vicenza plans to list its shares on the stock market in April to raise funds.

It will transform from a cooperative bank into a joint-stock company next month. Earlier this week it proposed to pay shareholders who oppose the transformation 6.3 euros a share to tender their stake - a tenth of the 62.5 euro price at which it last sold new shares only two years ago.

Unlisted banks such as Popolare Vicenza traditionally sell their shares to their clients and each year propose a value for their stock.

Shareholders last year approved an unprecedented cut to the value of Popolare Vicenza shares to 48 euros from 62.5 euros.

With 6.3 euros now seen as the benchmark, investors are likely to see the value of their savings all but wiped out when the bank lists. Popolare Vicenza is betting on demand from institutional investors to whom it has reserved half of the cash call.

UniCredit, which can ill afford to become a big shareholder in the bank due to its own stretched capital base, has committed to underwrite any unsold shares.

The European Central Bank has uncovered 1.1 billion euros in loans Popolare Vicenza granted clients to help them buy its own shares and the bank is under investigation for allegedly deceiving regulators.