UniCredit's stock took a dive after the Italian bank announced a discounting stock offering to raise capital.
NEW YORK (CNNMoney) -- UniCredit's stock plunged 14% on the Milan stock exchange Wednesday after the Italian bank slashed its offering price for €7.5 billion of new shares.
Milan-based UniCredit SpA said it would offer the shares at €1.943 apiece.
That's nearly 64% below UniCredit's stock closing price of €6.33 on Tuesday, though the bank put the discount at 43%, after accounting for presumed additional purchases that could lower the stock's price going forward.
The deep discount fueled the rapid erosion of the bank's stock Wednesday amid reports that demand for the offering was weak, even with the low offering price.
"The takeaway from UniCredit's problem raising money in the equity markets is that the [European Central Bank] needs to do more at liquefying Europe's banking system," said John Lonski, chief economist for Moody's Capital Markets Group. "European banks are very reluctant to lend to each other."
UniCredit was one of two dozen financial institutions in Italy to suffer a downgrade at the hands of rating agency Standard & Poor's. In mid-October, S&P downgraded UniCredit by one notch, along with six other Italian banks.
UniCredit is the largest bank in Italy, a nation that has suffered from economic malaise and staggering debt, putting it at the forefront of troubled countries in the eurozone.
In early December, banking regulators said European banks, including UniCredit, need to raise €115 billion by June. Banks must submit their plans, which could include retaining profits and cutting bonuses, to the European Banking Authority by Jan. 20.
|What we want Apple to unveil at WWDC|
|Millennials squeezed out of buying a home|
|7 traits the rich have in common|
|Big Data knows you're sick, tired and depressed|
|Your car is a giant computer - and it can be hacked|
|Overnight Avg Rate||Latest||Change||Last Week|
|30 yr fixed||3.56%||3.66%|
|15 yr fixed||2.76%||2.72%|
|30 yr refi||3.55%||3.67%|
|15 yr refi||2.80%||2.78%|
Today's featured rates: