AMSTERDAM -- BNP Paribas, France's biggest bank by market value, tapped investors for 4.3 billion euros ($US6.3 billion) in the latest mammoth share issue by banks seeking to repair damage from the credit crunch.
What had been a trickle of deals and rumoured rights issues threatens to become a flood, as banks rush to shore up their finances and free them from the restrictions and high costs of state aid.
BNP said it needed the funds to repay the French government early. The deal will free the bank from direct state shackles at a time when governments are seeking to impose restrictions such as on bonus payments.
Another reason for bank fundraising is to allow them to buy cut-price assets from under-pressure rivals. BNP's fundraising manoeuvre came as Dutch newspapers reported it was in talks to buy the commercial banking unit of nationalised Fortis Bank Nederland.
Switzerland's UBS AG also wants to cut government ties by buying its way out of a "bad bank" deal, its chief executive Oswald Gruebel said in an interview with the Financial Times, but may not be able to do so until late 2010.
Mr Gruebel also said its US wealth management unit Paine Webber is not a core part of the bank's operations but will not be sold at present. "We've had a lot of inquiries from potential buyers but it wouldn't make sense to sell at current valuations," Mr Gruebel was quoted saying.
In Italy, UniCredit SpA is set to announce a four billion euros capital hike after a Tuesday board meeting, turning down state aid and tapping the foundations that make up its core shareholding.
The hike would be aimed at boosting the core Tier I capital ratio of Italy's biggest bank towards eight per cent.
Like counterparts across Europe, UniCredit could be poised to take advantage of improving markets and an apparent investor willingness to support fundraising.
Norway's biggest bank DnB NOR last week unveiled a $US2.4 billion rights issue while Spanish bank BBVA opted to raise two billion euros from a sale of convertible bonds.
In Britain two banks under substantial state control are mulling huge share issues. Royal Bank of Scotland Group Plc has been gauging investor appetite for a share issue of up to four billion pounds ($US6.4 billion), a source familiar with the matter said earlier this month.
And Lloyds Banking Group Plc has said it is considering its own options.
Lloyds, which is reported to be targeting a raise of over 10 billion pounds, raised 4.3 billion in a share issue in June and used the funds to repay about 2.56 billion pounds to the UK government.
Previously HSBC Holdings Plc, not in receipt of direct state aid, raised 12.9 billion pounds to plug losses in its U.S. business and boost its ability to take advantage of troubles elsewhere by pursuing bolt-on acquisitions.
In the last six weeks two Dutch institutions which have received state aid, insurer Aegon NV and bancassurer SNS Reaal, announced share issues to repay part of their aid packages. Aegon said it was selling up to 1 billion euros worth of stock.
Such deals come as US banks start paying back their own aid or paying fees to get out of restrictive asset-guarantee deals, such as Bank of America last week.
US banks Morgan Stanley, JPMorgan Chase & Co and American Express Co said in June they would sell shares as they position to repay billions of dollars borrowed under the US Treasury's Troubled Asset Relief Program
By Ben Berkowitz of Reuters