One of Italy’s largest banks outlined its plans for survival last night as UniCredit said that it was seeking up to €6.6 billion in fresh funds.

The bank, Italy’s second-largest with operations throughout mainland and Eastern Europe, announced a scheme to sell 973 million shares at €3.083 a share. The bank’s stock, which has been halted several times in recent weeks after extreme price falls, closed on Friday at €3.092.

UniCredit also said that it was selling €3 billion in bonds that are convertible into shares. In an effort to conserve cash, it is scrapping its cash dividend, which will be paid in shares.

The capital-raising was accompanied by a profit warning. The bank said that earnings per existing share would be 39 cents, down from a previous forecast of 52 cents.

Dieter Rampl, the UniCredit chairman, also sought to quell speculation that Alessandro Profumo, the chief executive, was about to fall on his sword, saying that Mr Profumo enjoyed the full support and complete confidence of the board.

However, in statement the bank added: “The past three weeks have been extremely challenging for the entire financial sector resulting in unprecedented volatility and pressure, also on UniCredit shares.”

Shareholders will be asked to approve the share issue at a meeting next month before the offer is made early next year. Merrill Lynch and the local bank Mediobanca are UniCredit’s advisers.

The group dates back five centuries and in recent years has become a pan-European banking giant. It has evolved from the merger of nine of Italy’s largest banks and then combinations with HVB Group, of Germany, and Capitalia Group, an Italian rival. In June the bank announced plans to cut 9,000 jobs in Italy, Germany and Austria, but it pledged to create 11,500 positions in Eastern Europe when it opens 1,300 new outlets. The bank already earns about 50 per cent of its revenues outside Italy and has a workforce totallng about 180,000.

In Belgium, Yves Leterme, the Prime Minister, was in talks to find a buyer for Fortis, the Benelux-based financial group, before stock markets opened this morning. Officials were in talks to protect depositors and save thousands of jobs after the Dutch Government moved to nationalise the bank’s Dutch operations last week after a separate rescue plan failed.

BNP Paribas, France’s biggest bank, is thought to be the front-runner to acquire up to an 80 per cent stake in Fortis, with Belgium and Luxembourg’s governments taking control of the remaining 20 per cent of the bank’s operations in their countries.

Times Recommends

• Equitable Life halts £7bn sale on market turmoil
• Potential buyers emerge to save Woolworths staff
• Terrorist attacks close Bombay Stock Exchange