Italian group UniCredit shares have fallen by 17% in the Thursday session after Wednesday it lost 14% of value, and bank capitalization fell to 8.65 billion euros. This sharp fall came after representatives of the group announced that they would raise 7.5 billion euros through a capital increase, but will sell the new shares at a discount of 43% compared to the Tuesday price on the Milan stock exchange. After declining in the last two days, UniCredit shares yesterday dropped below the level of 4.5 euro, reaching the minimum of the last 19 years. Wall Street Journal writes that UniCredit would be worth more if it would be dismantled and sold.
UniCredit has the misfortune to be an international bank based in Italy, at a time when investors avoid the country, Wall Street Journal wrote on Tuesday. Never mind that one third of the bank’s risk weighted assets come from Germany and Austria, two countries considered safe for investors, while another third is located in attractive markets in Central and Eastern Europe, like Poland or Turkey. UniCredit is the largest lender to small and medium-sized companies in Germany, but investors have focused on the 40 billion euros exposure of the bank on Italian government debt and the banking operations of the market origin.
Maybe if UniCredit would change their name to EineKredit, based in Germany, investors may be more permissive, according to American publication. In this situation, the bank would be well capitalized and would have secured funding, given the operations launched by the European Central Bank.
Who are the investors who lose the most from UniCredit shares drop?
Only 11% of UniCredit Group shareholders have committed to purchase their respective shares in the capital increase, while another 13% said they would probably do it. Issuance of shares is fully subscribed by the banks, so that UniCredit will receive money, but analysts fear that banks that participated could be left with a substantial portfolio of unwanted shares. Shareholders that will not subscribe, will have their shares diluted and their holdings will become less valuable.
The Italian bank’s largest shareholder is another Italian bank, Mediobanca, which holds 6.76% stake in UniCredit, according to data available on Bloomberg. Mediobanca is a smaller bank than UniCredit and yesterday had a market capitalization of 3.57 billion euros after its shares have fallen by 10% in the last two days. Interestingly, the biggest shareholder in Mediobanca is UniCredit, with 8.67% of the shares. So it’s no wonder that Mediobanca is one of the shareholders who announced that will subscribe to the capital increase of UniCredit.
Another large shareholder of UniCredit is Libya. Central Bank of Libya holds a 4.05% stake, and two Libyan authorities have holdings of 2.59% and 0.56%. Libya bought the biggest stakes in UniCredit in October 2008, after Lehman Brothers collapsed. Libyan dictator Muammar Gaddafi approved then an investment of 1.5 billion euros in UniCredit. Now, all Libyan holdings are worth only 620 million euros.
The third shareholder of UniCredit is the Abu Dhabi fund Aabar Investments, which bought in June 2010 a package of 4.99% of UniCredit shares for 1.84 billion euros. The package is now worth 430 million euros. Significant package of shares are held by a number of savings banks in Italy, like Fondazione Cassa di Risparmio Verona, with 4.98%. Of portfolio investors, the largest stake is owed by the U.S. fund Dodge & Cox, who in 2007 bought a package of 1.54%. Germans from Allianz have two entities holding together 1.92% of the shares and Blackrock and Franklin Templeton have packages of up to 1%. Interestingly, Franklin Templeton has increased its stake in UniCredit last summer, before the turbulences in the European markets. Since then, the Italian group shares fell by almost 70%.
