By Valentina Za and Pamela Barbaglia
MILAN (Reuters) - UniCredit shares rose on Friday on expectations of the Italian lender selling stakes it holds in other banks to shore up its capital, reducing the need to issue new shares.
The bank is reviewing its assets and could end up trimming stakes in online broker FinecoBank, Poland's Bank Pekao and Turkey's Yapi Kredi, a source with knowledge of the matter told Reuters on Thursday.
UniCredit is also sounding out potential buyers for its payments processing operations, sources familiar with the matter said.
UniCredit faces concerns about low capital levels and has begun looking to replace Chief Executive Federico Ghizzoni after pressure this week from key shareholders who are disappointed by the bank's earnings.
Two sources close to the matter said on Friday an extraordinary board meeting on governance issues had been called for May 24.
Analysts estimate the bank could need between 5 billion and 8 billion euros (6 billion pounds) in fresh capital, adding the appointment of a new CEO could pave the way for an eventual share issue.
Cutting some of the holdings would dilute UniCredit's earnings, while simply delaying a capital increase that would still be needed later on, a Milan-based trader said.
The three units are estimated to have accounted for some 44 percent of UniCredit's net profits last year.
Shares in FinecoBank and Pekao on Friday lost nearly 3 percent, Yapi Kredi 5.6 percent. UniCredit shares jumped 7.6 percent.
The stock has lost 43 percent so far this year, underperforming a 36 percent drop in Italian bank stocks.
Sources told Reuters that shareholders were aware that uncertainty was damaging for the bank. Market expectations are mounting in Italy that a solution could emerge between June 1, when several of the bank's internal committees meet, and a board meeting on June 9.
European banks are under pressure as negative interest rates dent earnings. Italian lenders have also been hit by worries about 360 billion euros of bad loans that resulted from a three-year recession, dragging on their capital.
UniCredit, whose biggest shareholder is Abu Dhabi sovereign fund Aabar, is Italy's only globally systemically important financial institution.
UniCredit said earlier this month its best-quality capital stood at 10.5 percent of assets at the end of March, just above a European Central Bank (ECB) requirement of 10 percent and well below a level of 12.9 percent at rival Intesa Sanpaolo (MI:ISP).