Swedbank shareholders strongly backed a deeply discounted rights issue, raising 15.1 billion Swedish crowns the lender is tipped to use as a cushion against mounting loan losses in the crisis-hit Baltics.
The Nordic bank with the biggest exposure to the troubled economies of Latvia, Lithuania and Estonia said more than 98 percent of subscription rights were taken up for the cash call - its second in less than a year and part of a recent flurry of balance sheet-boosting equity fundraisings by European banks.
Remaining shares in the $2.2 billion issue, set at a price of 39 crowns per share in August, were taken up by other investors and overall the issue was almost twice subscribed, the bank said in a statement on Tuesday. Swedbank shares closed at 66.25 on Monday.
Analysts said Sweden's fourth largest bank by market capitalisation would use the issue as a buffer, and that the pricing reflected in particular political and economic uncertainties in Latvia which have kept investors on edge for several months. "I find hard to believe that they are going to put this capital to work before they get better visibility in the Baltics," said a London-based analyst.
"The market is still talking about Latvia, and possible changes to mortgages so those concerns will still be there. Will they devalue, won't they devalue? This will sit as a buffer until they see how the situation in the Baltics play out." European banks have already raised more than 30 billion euros this year from share sales, tapping improved investor sentiment to rebuild eroded balance sheets or repay government aid after the worst financial crisis in decades, and several more are lining up offerings.
Swedbank's Nordic peer DnB NOR, France's BNP Paribas and Societe Generale, and Italy's UniCredit are all planning multi-billion euro cash calls, while Britain's Lloyds and Austria's Erste Bank are tipped to do likewise. Swedbank shares, which closed sharply higher on Monday after a report of a possible tie-up with the largest Nordic bank Nordea, dipped 1.9 percent to trade at 65.0 crowns at 0939 GMT. The DJ Stoxx European banking sector was down 1.1 percent.
The bank has felt obliged to raise nearly 30 billion crowns in equity over the past year due to double-digit recession in the Baltics, one of its key markets. It has already set aside billions of Swedish crowns to cover expected loan losses as businesses and householders in the region default on borrowings.
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