The financial crisis inflicted more pain on European banks on Wednesday as profits plunged at Italy's UniCredit, income fell at France's Natixis and more lenders faced calls to raise capital. German property lender Hypo Real Estate crashed to a 3.1 billion euros ($4 billion) quarterly loss and Britain's Barclays faced a possible shareholder revolt over its planned 7 billion pounds ($10.8 billion) capital raising.
Banks are being forced to take big writedowns on falling asset values, have become ultra wary of lending to each other and have been forced to raise huge sums to make sure they can meet future obligations. State bailouts have provided stability, but a deepening economic downturn further threatens profits as does the cost of the rescue plans. Banks may also need to raise more capital.
France's fourth-biggest listed bank Natixis denied a newspaper report it had lost 975 million euros ($1.2 billion) in its trading operations in October but said its core investment banking unit had had a tough time. Natixis said market turmoil would have "a negative impact of 250 million euros on revenues" at its investment banking arm - which analysts and fund managers said would leave it nursing a loss on its trading activities.
UniCredit, Italy's second-biggest bank, turned in a 54 percent fall in third-quarter net profit to 551 million euros, citing the "dramatic conditions" in the markets. UniCredit is boosting its capital by 6.6 billion euros by skipping its cash payout and plans a capital increase to try to match the strength of European rivals. Its core tier 1 ratio - a measure of financial strength - stood at around 5.7 percent before the impact of its capital increase, which it said should rise it to around 6.7 percent by the end of the year.
UBI Banca, Italy's number-five by number of branches, side-stepped confirmation of its dividend, saying on Wednesday a payout would be up to shareholders to decide. It reported an 18 percent rise in nine-month net profit to 620 million euros. Italy's largest bank Intesa Sanpaolo on Tuesday said it would bolster its finances by skipping a cash dividend on 2008 results as it said profits had more than halved. Dresdner's de Frias said UniCredit was one of the big banks most in need of capital, alongside Credit Agricole and Societe Generale in France. He estimated they had capital deficits of between 5 billion and 8 billion euros.
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