UniCredit Shareholders Approve EUR4 Bln Capital Hike

Shareholders of UniCredit SpA - Italy"s largest banking group - shareholders Monday approved a capital hike of up to EUR4 billion (USD 6 bln), by issuing shares to be offered pre-emptively to existing shareholders.

The move is necessary to strengthen the capital ratios of the group.

UniCredit said that after the completion of the capital hike, its core Tier 1 ratio will be 8.4% and the Tier 1 will be at 9.2%. At the end of September, UniCredit"s core Tier 1 ratio was 7.55%, up from 6.85% in June 2009.

The capital hike will begin in January 2010 and will be completed one month later. The bank intends to sell 8 billion new shares to its existing shareholders.

"We want to consolidate our capital to be successfully seize the opportunities that the economic recovery will bring", said Alessandro Profumo, general manager of UniCredit. UniCredit"s current market capitalization is EUR 42 billion.

Unicredit posted a net profit of EUR 394 million in the July-September 2009 period, down 26% from EUR 490 million at the end of Q3 2008, due to increased write-downs. Analysts were expecting a net profit of EUR 360 million.

The Italian bank said that solid trading results compensated for the drop in interest revenues. Trading profits in Q3 2009 amounted to EUR 715 million, compared to an EUR 524 million loss at the end of Q3 2008.

Write-downs for bad loans increased YOY to EUR 2.16 billion, up from 1.1 billion Euros.

The manager of "UniCredit" said the bank would not lay off employees.

"UniCredit" did resort to state aid to increase its capital, with its smaller rival, "Intesa Sanpaolo" SpA making a similar decision. "Intesa", the second largest Italian bank, announced a plan to sell non-core assets in a move to raise capital.

FOTO: UniCredit"s net commission revenues for dropped 12% in Q3 2009, to EUR 1.9 billion.