Italy's UniCredito is preparing a bond issue worth some €800 million to help finance its planned takeover of HVB Group and its subsidiaries, a newspaper reported today.
Germany's Handelsblattcited banking sources as saying that UniCredito would issue the bonds after the summer to shore up its core capital ratio. A source confirmed UniCredito was considering a bond issue but said the size of the bond has not yet been settled.
The source added that the size would depend on how much cash UniCredito will have to pay to buy out minorities in two of HVB's units, and that this will be known when the offer is unveiled after the summer.
Italy's largest bank is offering shares for HVB and its Bank Austria Creditanstalt and BPH subsidiaries in Europe's biggest cross-border banking merger, worth over €20 billion.
But it is also offering cash alternatives for Bank Austria and BPH and may have to consider ways of raising funds, including a bond issue or asset sales.
UniCredito has already said it plans to boost its capital ratios by issuing non-dilutive capital instruments as well as from securitisations or the sale of non-core assets. UniCredito declined to comment.