While headlines are reeling with the almost-50% drop (and 8 halts today alone!) in UniCredit's stock price since the start of the year (as it tried and 'succeeded' to raise capital from clearly risk-averse investors), the rest of the Italian banking sector is now 'crashing'. With bank stocks down 12-20% year to date across the board, the clear fear is that the cost of raising real equity capital (not finding some short-term funding crisis solution) remains extremely high and as we tweeted last week [3], if the EUR7.5bn capital raise caused a 40% sell-off in UniCredit, how is the market going to cope with the EUR115bn more that is needed? Good Luck.
[4]
8 Halts in UniCredit today...
[5]
as the rest of the Italian banking sector's equity capital is devastated.
Chart: Bloomberg