SAN Banco Santander SA

MILAN—UniCredit SpA said Monday its board approved the sale of a stake in financial services company FinecoBank SpA as part of the bank's incoming chief executive's focus on boosting capital.

In a statement, UniCredit said it would sell a stake of up to 10% in FinecoBank's existing shares to certain institutional investors via an accelerated bookbuilding process. The placement will start "immediately." UniCredit, Italy's largest bank by assets, said it currently holds about 65% of FinecoBank and aims to maintain a majority stake.

UniCredit's future CEO Jean-Pierre Mustier told reporters Monday that the FinecoBank stake sale will add between 7 and 8 basis points of capital. At Monday's closing prices a 10% stake in FinecoBank is worth roughly €345 million.

At the end of June the bank appointed Mr. Mustier, who had been in the recent past the bank's investment banking chief, as CEO, more than a month after former CEO Federico Ghizzoni agreed to step down.

The decision put an end to more than a month of bickering among board members as to who was the best candidate to replace Mr. Ghizzoni and steer the company to drastic actions to strengthen the bank either via a capital increase or asset sales, or both. Investors have been dumping the stock for more than a year, fretting about the financial solidity and profitability of the lender for months. Shares are trading at record low levels and have dropped more than 60% since the beginning of the year, making UniCredit one of the worst performers of the sector.

UniCredit also said the board of directors approved the launch of an in-depth review of the bank's strategy under Mr. Mustier to reinforce and optimize its capital position. The review will encompass all major areas of the bank and will focus on capital optimization, cost reduction, cross selling and improved risk discipline, the bank said.

Mr. Mustier also said the bank was working with its partners to try to find a solution about a merger deal of its fund management business Pioneer and Banco Santander SA's asset-management unit. UniCredit and Santander reached a preliminary agreement on the merger in April last year.

Mr. Mustier's comments came in response to a report by the Financial Times, which said the two banks were set to abandon the deal over concerns about the uncertainty following the U.K.'s vote to leave the European Union.

"We await a number of regulatory responses for this transaction," a Santander spokesman said.

Jeannette Neumann contributed to this article.

Write to Giovanni Legorano at giovanni.legorano@wsj.com

(END) Dow Jones Newswires

July 11, 2016 15:05 ET (19:05 GMT)

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