UniCredit Reported to Plan Raising $14 Billion in Stock Sale

  • Ansa reports speculation of UniCredit-Societe Generale merger
  • UniCredit, Societe Generale officials decline to comment

UniCredit SpA is considering raising as much as 13 billion euros ($14 billion), according to press reports, with one news agency saying that there’s speculation about a merger between Italy’s largest lender and France’s Societe Generale SA.

The bank will probably decide on the timing of the capital increase after the results of Italy’s constitutional referendum next month, the Wall Street Journal reported on Monday, citing people familiar with the matter. Italy’s Ansa said on Monday that a merger between the two lenders is circulating widely in financial circles, without elaborating. Officials for UniCredit and Societe Generale declined to comment.

UniCredit Chief Executive Officer Jean Pierre Mustier is under pressure to boost capital buffers and reverse a slide in shares that has eroded more than half the company’s market value this year. The Milan-based lender, which is set to present a new business plan on Dec. 13, is considering raising at least 5 billion euros through a share sale and converting 3 billion euros of subordinated hybrid equity-linked securities, people familiar with the matter have said.

“Such a merger is very unlikely, as it would be too complex in the current regulatory environment,” said Wolfram Mrowetz, chairman of Alisei SIM, a Milan brokerage. “Uncertainty will weigh on the shares until the plan is unveiled and the amount of the share sale defined.”

UniCredit swung between gains and losses, trading at 2.29 euros at 3:07 p.m. in Milan, up 0.3 percent. It has a market value of about 14 billion euros. Societe Generale advanced 0.9 percent to 40.14 euros, paring losses this year to about 5.7 percent.

Both UniCredit and Banca Monte dei Paschi di Siena SpA are looking to raise capital as part of wider overhauls designed to strengthen profitability as investors grow increasingly concerned about a Dec. 4 referendum that could topple the government of Prime Minister Matteo Renzi, who has supported a restructuring of Italy’s banking system.

Italy’s Il Messaggero reported on Saturday that the lender is looking to raise between 11 billion euros and 12 billion euros, without saying where it obtained the information.

Mustier was head of Societe Generale’s corporate and investment-banking division and a member of the board before leaving the Paris-based bank in 2009. 

— With assistance by Sonia Sirletti

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