Unicredit chief executive Federico Ghizzoni defended the Italian bank’s 7.5 billion euros ($9.6 billion) rights issue despite its plummeting share price.
CNBC
The share price of the company has halved since it announced a deeply discounted rights issue last Wednesday. New shares in Unicredit are being offered at 1.943 euros each – 43 percent below the bank's share price when the rights issue was announced.
The rights issue should ensure that Unicredit, which is classed as one of the banks most important to the European banking system by regulators, meets new European Union capital requirements.
“We are happy and really confident that the deal will be closed successfully,” Ghizzoni told CNBC Monday.
“We will be a very strong bank after this, one of the strongest in Europe,” he claimed.
“The bank has strong fundamentals.”
Ghizzoni defended his actions in calling the rights issue, and said that he would do the same thing in retrospect. He pointed out that the bank will have first mover advantage by moving ahead of other European banks.
“Macro conditions are quite difficult and I don’t think [that] will improve soon. Being the first is very important,” he said.
Unicredit’s share price has suffered in recent months amid worries that Italy, the euro zone’s third-largest economy, might need to be bailed out because of its high debt levels and soaring yields on its debt.
Ghizzoni said he was surprised that the response had been so negative and added that the bank was “working very hard” to make sure the rights issue completed successfully.
