UniCredit adds to equity raisings fears Investor worries over the ability of European banks to raise much-needed equity mounted on Thursday after UniCredit suffered a steep share price fall for the second day, rattling the group's planned €7.5bn rights issue. UniCredit's share price dropped 17 per cent, compounding a 14 per cent slump on Wednesday, as the bank published details of its deeply discounted share price offering. Analysts blamed continued investor nervousness about Italy and banks in general. "Frankly, you'd be insane to put any money into this," said one London-based analyst. That's nothing against UniCredit. It's a country problem. UniCredit said on Wednesday that it would sell rights at €1.94 a piece, a 43 per cent discount to the prevailing theoretical ex-rights price (Terp), which factors in the transaction's dilution effect on the stock. Banks across Europe are watching the deal nervously, conscious that it could define the market's attitude towards bank capital-raising in the months ahead. European regulators have told Europe's banks to raise an aggregate €115bn by June in an effort to buttress them against the risk of eurozone sovereign debt defaults, though many lenders are trying to bridge the gap by shrinking, rather than with rights issues. People close to UniCredit and its underwriters said a number of UK-based hedge funds had been using a variety of mechanisms to defy Italy's short selling ban and drive down the bank's share price. One person said Consob, the Italian regulator, was poised to look into those allegations, though Consob could not be reached for comment. Several shareholders had also followed a "tail-swallowing" tactic to subscribe to their rights - selling a portion of stock to give them the funds to subscribe to new rights at the cheaper price. This had been aggravated by the otherwise thin trading volumes in Milan this week, which is closed again on Friday for the Epiphany holiday. UniCredit insiders said they remained calm about the prospects for raising the funding. Thursday's closing share price of €4.48 remains well above the rights price, and the issue is fully underwritten by a syndicate of banks led by Bank of America Merrill Lynch and Mediobanca. "I still think this deal will prove a spectacular success," said one underwriter.