One of the largest banks in Europe - the Italian banking group Unicredit - announced plans for a massive deployment of asset-bond of € 25 billion until conditions in the debt market can still attract the attention of investors, the bank intends to use the funds to shore up its capital.
As stated in the notice for Unicredit Luxembourg Stock Exchange, the bank intends to offer € 25 billion in bonds backed by cash flow from mortgages and other loans to retail customers. The money will go to strengthen the capital of the Italian bank financing and the most important operations. Analysts say that after mid-January the rating agency S & P downgrades two notches credit rating of Italy by two notches to BBB +, Italian banks were in a difficult situation, because now there may well be similar to rating downgrades of Italy, on the other two agencies - Moody `s and Fitch, who still retain that country ratings at A2 and A + respectively, and then reduce the rating of the largest companies of the financial sector. In addition, many European banks, including Unicredit, to strengthen its core capital under the new rules of the Basel Committee on Banking Supervision (Basel 3), which are beginning to come into effect from 2013.
Recall September 12, 2010 Basel Committee on Banking Supervision announced to tighten banking regulation, known as "Basel-3 '. Major improvements to the capital requirements for banks.
Share of Tier I capital in the total minimum required capital of the bank recommended an increase from the current 4% to 6%. The share of the highest quality (able to absorb losses) of equity capital in the first level should be raised from 2% to 4.5%.
In addition, banks require the creation of the so-called back-buffer Tier in the amount of additional 2.5%, which actually raises capital adequacy ratio of the first level to 8.5%. Creating a capital buffer will allow banks to insure against large losses in the event of future crises. At the same minimum level of overall capital adequacy remains at 8% of bank assets weighted by risk level, but the de facto capital, taking into account the buffer reaches 10.5%. The transition to the new requirements will be gradual - from 2013 to 2019. The analytical report issued a few days after the publication of new rules, Goldman Sachs predicts that in 2010-2012 the major banks increase their capital by a total of € 112 billion (see http://kommersant.ru/doc/1524454 .) In addition, last year the European banking management recommended that the Italian bank to raise capital in the amount of € 8 billion by the end of June this year.
Urgent need to attract large funds has forced the bank in late January to announce the release of bonds for € 7,5 млрд discounted 43%. That is why the new placement of Unicredit especially in view of deteriorating investor sentiment about the immediate prospects of the eurozone is seen by analysts and market players as a sort of test for investor confidence. "Everyone is watching the deal as Unicredit for a litmus test, showing the likelihood of a successful capital raising in the future" - said The New York Times on condition of anonymity, one of the top managers of major European bank.
The reaction of investors to raise capital for new Unicredit in a difficult market was nervous - in early trading on the Frankfurt Stock Exchange Bank's shares rose in price by 3.5%, after a half hour climb and lost even went to a small minus, but by the middle of the trading session again added 1.5% to the closing price the previous day.
As stated in the notice for Unicredit Luxembourg Stock Exchange, the bank intends to offer € 25 billion in bonds backed by cash flow from mortgages and other loans to retail customers. The money will go to strengthen the capital of the Italian bank financing and the most important operations. Analysts say that after mid-January the rating agency S & P downgrades two notches credit rating of Italy by two notches to BBB +, Italian banks were in a difficult situation, because now there may well be similar to rating downgrades of Italy, on the other two agencies - Moody `s and Fitch, who still retain that country ratings at A2 and A + respectively, and then reduce the rating of the largest companies of the financial sector. In addition, many European banks, including Unicredit, to strengthen its core capital under the new rules of the Basel Committee on Banking Supervision (Basel 3), which are beginning to come into effect from 2013.
Recall September 12, 2010 Basel Committee on Banking Supervision announced to tighten banking regulation, known as "Basel-3 '. Major improvements to the capital requirements for banks.
Share of Tier I capital in the total minimum required capital of the bank recommended an increase from the current 4% to 6%. The share of the highest quality (able to absorb losses) of equity capital in the first level should be raised from 2% to 4.5%.
In addition, banks require the creation of the so-called back-buffer Tier in the amount of additional 2.5%, which actually raises capital adequacy ratio of the first level to 8.5%. Creating a capital buffer will allow banks to insure against large losses in the event of future crises. At the same minimum level of overall capital adequacy remains at 8% of bank assets weighted by risk level, but the de facto capital, taking into account the buffer reaches 10.5%. The transition to the new requirements will be gradual - from 2013 to 2019. The analytical report issued a few days after the publication of new rules, Goldman Sachs predicts that in 2010-2012 the major banks increase their capital by a total of € 112 billion (see http://kommersant.ru/doc/1524454 .) In addition, last year the European banking management recommended that the Italian bank to raise capital in the amount of € 8 billion by the end of June this year.
Urgent need to attract large funds has forced the bank in late January to announce the release of bonds for € 7,5 млрд discounted 43%. That is why the new placement of Unicredit especially in view of deteriorating investor sentiment about the immediate prospects of the eurozone is seen by analysts and market players as a sort of test for investor confidence. "Everyone is watching the deal as Unicredit for a litmus test, showing the likelihood of a successful capital raising in the future" - said The New York Times on condition of anonymity, one of the top managers of major European bank.
The reaction of investors to raise capital for new Unicredit in a difficult market was nervous - in early trading on the Frankfurt Stock Exchange Bank's shares rose in price by 3.5%, after a half hour climb and lost even went to a small minus, but by the middle of the trading session again added 1.5% to the closing price the previous day.
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