Pop. Vicenza IPO Manager UniCredit Weighs Delay in Tough Market

  • Bank needs capital increase to avoid resolution, ECB says
  • UniCredit may be forced to buy large portion of share sale

Banca Popolare di Vicenza SCpA’s initial public offering, a step aimed at ensuring the survival of the Italian lender, may be delayed by underwriter UniCredit SpA.

“UniCredit is assessing whether the conditions exist to carry out the operation in the set timeframe,” the bank said Wednesday in an e-mailed statement.

UniCredit denied having any contact with the government about the IPO after the Financial Times on Tuesday reported that it was in talks on the use of a so-called material adverse change clause, which could allow the lender to back out.

Pop. Vicenza plans to raise as much as 1.8 billion euros ($2 billion) in an IPO as the cooperative lender transforms into a joint-stock firm. The European Central Bank, which has asked the bank to implement the plan by April 30, warned that without a capital increase the lender could be resolved, imposing losses on creditors.

As sole guarantor of the IPO, UniCredit would be forced to buy any shares not taken up by the market. A lackluster share sale followed by a large purchase, or even a takeover of Vicenza by UniCredit, would have an effect beyond the banks directly involved, according to Fabrizio Bernardi, an analyst at Fidentiis equities.

“If UniCredit is forced to consolidate Pop. Vicenza simply because the rights issue is not successful, none of the Italian troubled banks would be able to find a consortium for a capital injection,” Bernardi said.

Unicredit fell as much as 4.4 percent in Milan trading and was down 3.7 percent at 3.15 euros as of 10:25 a.m. The stock has declined 38 percent this year.

Pop. Vicenza is one of a number of Italian banks to attract special attention from the ECB, which has been pushing to shore up euro-area lenders since taking over as supervisor in late 2014. Veneto Banca SpA, plans to raise about 1 billion euros in an IPO in April and the ECB has asked for the bank to make major changes in its board.

If the IPO plans go ahead, the lenders will be seeking capital following a tough period for European banking stocks. The Stoxx Europe 600 Banks index has fallen almost 20 percent this year and five of the six worst-performing stocks on the 30-member index are Italian.

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