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UniCredit investors edgy as they wait to hear fate of CEO
[MILAN] Shares in UniCredit initially fell more than 2 per cent on Monday before recovering on the eve of a board meeting that is expected to discuss the fate of the Italian bank's embattled chief executive.
UniCredit CEO Federico Ghizzoni could resign ahead of Tuesday's extraordinary board meeting, three sources close to shareholders in Italy's biggest bank by assets said late on Friday.
Mr Ghizzoni, at the helm of UniCredit since 2010, has faced growing investor unhappiness over the bank's weak share price performance, stretched capital position and low profitability when compared to rival heavyweight Intesa Sanpaolo.
Analysts estimate UniCredit, Italy's only globally systemically important financial institution, could need between 5 billion and 10 billion euros (S$7.73- to S$15.5 billion) in fresh capital and the appointment of a new CEO may pave the way for an eventual share issue.
Shares in UniCredit gained 8 per cent on Friday after sources said the bank was considering reducing its stakes in units such as online broker FinecoBank, Poland's Bank Pekao and Turkey's Yapi Kredi to bolster its financial strength.
The stock fell around two percent on Monday before recovering lost ground by 0830 GMT to trade at 3.01 euros.
Broker ICBPI said the management issue had to be resolved before any definitive decisions could be made on asset sales. "Future financial strategies will be better defined once management changes have taken place with the distinct possibility of a capital increase ," broker ICBPI said in a note.
UniCredit's best-quality capital stood at 10.5 per cent of assets on a transitional basis at the end of March, just above a European Central Bank (ECB) requirement of 10 per cent and well below a level of 12.9 per cent at rival Intesa Sanpaolo.
ICBPI said a 4-billion euro share issue would lift UniCredit's core capital ratio to the 11.5 per cent target the bank set for 2018 under its business plan. "Without asset sales, a bigger issue would be needed to match best-practice levels of 12.5-13 per cent seen in Italy and Europe," it said.