Italian lender UniCredit's 7.5 billion euro ($9.6 billion) capital increase will likely be taken up by 90-95 per cent of shareholders, a source at one of the deal's 27 underwriters said.

UniCredit's deeply discounted rights issue, designed to help it meet tougher European Union capital requirements, has been fully underwritten by a consortium led by Mediobanca and Bank of America Merrill Lynch.

There had been fears underwriters might be left holding a lot of UniCredit stock when its price plunged early this week.

UniCredit shares closed up 0.5 per cent at 2.9180 euros, compared with a 2.2000-euro low on Monday and a rights-adjusted 4.1691-euro close on January 3, the day before the issue price was announced.

The source said underwriters were optimistic about the outcome of the cash call, regarded as a litmus test of investor confidence in European banks under pressure to raise funds to withstand the region's debt crisis.

"There has been pre-marketing and scouting done by every bank (in the consortium), and considering also other guaranteed capital increases we are looking at 90-95 per cent," the source said.

A second source close to the matter said underwriters did not expect a large amount of unsold rights. Abu Dhabi and Libyan shareholders may not take up all of their rights and have their holdings diluted, one of the sources said.

The Libyan central bank, which holds 4.99 per cent of UniCredit, said yesterday it would maintain its stake in the bank by buying new shares. The Libyan Investment Authority, which has around 2.6 per cent, has not yet said what it intends to do.

Abu Dhabi fund Aabar fund has a 5 per cent stake, covered by collar and put options negotiated with Deutsche Bank and Morgan Stanley and meant to protect it against share price falls.

Those collar transactions expire in 2013, according to a report on the website of Abu Dhabi investment vehicle IPIC, of which the Aabar fund is a unit, complicating its participation in the rights issue.

Traders have cited foreign funds buying after the steep slide in the share price early this week, and UniCredit has said its shareholder base could be reshuffled in the wake of the capital increase.-Reuters