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UniCredit launched a €7.5 billion two-for-one rights issue at a discount of 69 per cent from its closing share price yesterday (January 3rd), reports Reuters.
This was intended to strengthen its balance sheet but has sent shares in the bank tumbling by nine per cent.
Despite an impressive four-day showing from European stocks, they began to fall following the move from Italy's biggest lender.
Andrew Lim, banks analyst at Espirito Santo told the news provider investors had not expected UniCredit's decision.
"UniCredit's discount is much bigger than for the other banks and that being the case, I think it's come as a bit of a shock to some investors," Mr Lim added.
European stocks had improved yesterday after positive reports from the US manufacturing industry. The Stoxx Europe 600 Index hit its highest point for two-month after growing by 0.4 per cent, Bloomberg noted.
Posted by Clive Arneil
