UniCredit SpA announced that it has reached an agreement with investors regarding a $14 billion share issue. The cash call was approved with 99.6 of votes by shareholders, which represent more than half of bank’s capital. The share issue almost matched UniCredit’s market value.
The cash call will help the bank to restructure and clean up the balance sheet, and it is one of the steps in respond to the turnaround plan the bank announced last month, which will offload bad loans of €18 billion and cut 14,000 jobs. According to Jean Pierre Mustier, the new chief executive of the bank, the share issue will be completed by March 10.
According to the bank, some of €5 billion left over from its write-down on bad loans will be used to finance departure of employees through early retirement and voluntary redundancy plans, and the rest of the money will be used to enforce the capital defenses.
Currently, the bank suffers from low revenue growth, amid low-growth mode in much of Europe. The bank expected that the revenue will rise 0.6% through 2019, and CEO of the bank hopes to boost net income by cutting costs of €4.7 billion in 2019.
In 2012, the bank also raised €7.5 billion at the demand of regulators. Over a decade, the bank has struggled to build capital after spending $60 billion acquisitions.