UniCredit Warns Investors EU Could Abandon Euro

Italy's top bank UniCredit has warned investors that if the eurozone crisis worsens the euro may be abandoned, though bank head Federico Ghizzoni Thursday said the scenario remained unrealistic.

In a prospectus released after UniCredit announced it was selling shares to meet new capital requirements, the bank flagged up a series of risk factors.

"Concerns that the Eurozone sovereign debt crisis could worsen may lead to the reintroduction of national currencies in one or more Eurozone countries or, in particularly dire circumstances, the abandonment of the euro," it said.

Such an event "would have a significant negative impact" on the bank, which has a strong presence not only in Italy, but also in Germany, Austria and in Eastern Europe, it said.

However in an interview published Thursday by Il Sole 24 Ore daily, Ghizzoni said it is "unrealistic to think that the euro could be brought into question."

Italy is struggling to fight off the ferocious debt crisis and has already begun to slip into recession, according to the government.

"Any further deterioration in Italy’s economic situation could have a significant negative impact on the activities of the group, given its considerable exposure to the country’s economy," the bank said.

Unicredit, which has to raise 7.5 billion euros ($9.8 billion) to meet new capital requirements, announced Wednesday it would sell shares in the capital increase with a 43-percent discount from their theoretical fair value.

The news has seen the bank hit hard on Milan's stock exchange.