Unicredit announces Italy's biggest-ever rescue fundraising

Italy's largest banking group, Unicredit, has announced the country's largest ever fundraising to prevent it from failing under a mountain of bad debts.

The bank is to raise €13bn (£11bn) of new money from shareholders in January, says Reuters.

Bosses say the money will be used to "mop up" a total of €17bn (£14bn) of bad debts on the bank's balance sheet.

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It is part of a wider restructuring plan that will also see 14,000 jobs cut and 900 branches close to cuts millions from annual running costs.

"The bank aims to get its core capital ratio - a key measure of financial strength - above 12.5 per cent by 2019, as well as post net profits of €4.7bn [£3.9bn] and resume dividend payments that year," says the BBC.

Markets reacted warmly and Unicredit's shares rose by as much as 15 per cent following the announcement yesterday. Trading dipped back close to six per cent today, but at €2.64, remains around 30 cents above its recent low reached earlier this week.

As a sign of its travails, however, the bank is down about 50 per cent over the past year.

Unicredit is considered "the only Italian bank deemed important to the stability of the global financial system", says Reuters, and has been "hit by profitability concerns, bad loans and a weaker balance sheet than major European rivals".

Its rival, Monte dei Paschi, the world's oldest bank, continues its own efforts to secure €5bn (£4.2bn) of new funding to avoid a government bailout.

Italian banks have been struggling under the weight of a €360bn (£300bn) toxic loan hangover since the financial crisis. They have also been rocked by the fall of Matteo Renzi's government this month and the resulting political instability.