* Subscription take-up 98 percent on $2.2 bln rights issue
* Priced at 41 percent discount to Monday close
* Issue to help speed up return to wholesale funding
* Swedish bank's shares down 2.6 percent
(Recasts, adds price comparison details)
By Sven Nordenstam and Mia Shanley
STOCKHOLM, Oct 13 (Reuters) - Swedbank investors brushed off a climate of uncertainty in Latvia to back a cut-price rights issue, raising 15.1 billion crowns the lender is tipped to use as a buffer against more losses in the Baltics.
The Nordic bank with the biggest exposure to the troubled Baltic economies said more than 98 percent of subscription rights were taken up for the deeply discounted cash call -- Swedbank's second in less than a year and part of a recent flurry of balance sheet-boosting share issues by European banks.
The equity raising comes during a tumultuous week for Latvia, where the Swedish bank is heavily exposed. Swedbank said on Monday it would review its business in the country if a controversial plan to limit the amount banks can collect on defaulted home mortgages went through.
Remaining shares in the $2.2 billion issue, set at a price of 39 crowns per share in August, were taken up by other investors and overall the issue was almost twice subscribed, the bank said on Tuesday. Swedbank shares closed at 66.25 on Monday.
Analysts said Sweden's fourth largest bank by market capitalisation would use the issue as a buffer, and that the pricing reflected in particular political and economic uncertainties in Latvia which have kept investors on edge for several months.
"I find it hard to believe that they are going to put this capital to work before they get better visibility in the Baltics," said a London-based analyst.
"The market is still talking about Latvia, and possible changes to mortgages so those concerns will still be there. Will they devalue, won't they devalue? This will sit as a buffer until they see how the situation in the Baltics play out."
CAPITAL IS KING
European banks have already raised more than 30 billion euros this year from share sales, tapping improved investor sentiment to rebuild eroded balance sheets or repay government aid after the worst financial crisis in decades, and several other lenders are lining up offerings.
Swedbank offered its shares at a 40 percent discount to the theoretical ex-rights price (TERP) when the price was set last month, a level which analysts say is largely in line with other Nordic offers.
Swedbank's Nordic peer DnB NOR, France's BNP Paribas and Societe Generale, and Italy's UniCredit are all planning multi-billion euro cash calls, while Britain's Lloyds and Austria's Erste Bank are tipped to do likewise.
An improvement in investor appetite has allowed SocGen and BNP to set their calls at narrower discounts of 27 percent to TERP. But the better mood is not global, and bankers say Lloyds would probably have to pitch any offer at a 40 percent discount to lure investors into what would be a higher risk offer.
Swedbank shares, which closed sharply higher on Monday after a report of a possible tie-up with the largest Nordic bank Nordea, dipped 2.6 percent to trade at 65.0 crowns at 1303 GMT. The DJ Stoxx European banking sector was down 1.0 percent.
The bank has felt obliged to raise nearly 30 billion crowns in equity over the past year due to double-digit recession in the Baltics, one of its key markets.
It has already set aside billions of Swedish crowns to cover expected loan losses as businesses and households in the region default on borrowings.
Chief Executive Michael Wolf said in a statement on Tuesday the cash call would help the bank take advantage of opportunities once business normalises and "secure an accelerated return ... to competitive wholesale funding." Bank of America Merrill Lynch and Credit Suisse were the underwriters of the new issue.
For a column on Swedbank, click on
For a factbox on global bank equity issues in 2009, click on
(editing by John Stonestreet)
(Additional reporting by Steve Slater in London)