Italy’s top bank UniCredit yesterday set a low price for the share issue to raise €7.5 billion to meet new capital requirements, sending its share price plunging.

Unicredit said in a statement it would sell shares in the capital increase beginning on January 9 at €1.943 each, which represents a 43 per cent discount from their theoretical fair value based on the increase in the number of shares and Tuesday’s market price.

The bank’s shares quoted on the Milan stock exchange plunged following the announcement, and were traded down 5.69 per cent at €5.97 while the market was down 0.64 per cent overall. The bank’s board of directors set the price of the new share issue “taking into account, inter alia, the current market conditions”.

European authorities are forcing the region’s banks to quickly raise their core capital to nine per cent by June to be able to better withstand shocks from the eurozone debt crisis, but given investors’ wariness over their exposure to sovereign debt this may prove challenging.

Following the 2008-2009 financial crisis regulators agreed to strengthen banks’ core capital reserves from two to seven per cent under Basel III rules, but the banks were given nearly a decade to comply.

Unicredit said on November 14 that it plans to raise its core capital from 8.74 per cent to nine per cent in 2012 and then to 10 per cent by 2015.