Uni­credit chief ex­pects Vi­cenza cash call suc­cess

The Pak Banker - - COMPANIES/BOSS -

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.

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