Scandal-hit Societe Generale will sell 5.5bn euros ($8bn; £4.1bn) of shares at a 40% discount to shore up its balance sheet after huge trading losses.
The scandal surrounding Jerome Kerviel stunned the financial world
The French bank will offer shares at 47.50 euros each to existing investors, down from Friday's close of 77.72.
Analysts said the huge discount showed the pressure on the bank after alleged illicit trades cost it 4.9bn euros.
The plans emerged as lawyers for Jerome Kerviel, who the bank blames for the losses, try to get him freed.
On Friday, the Paris appeals court ordered Mr Kerviel to be jailed while unauthorised trades of about 50bn euros at the bank are investigated.
Mr Kerviel is being investigated for breach of trust, falsifying documents and breaching computer security, but not the more serious charge of fraud.
The court ruled that he should be held in custody because of the "necessities of the investigation" and the risk that he could flee the country.
But the trader's lawyer, Elisabeth Meyer, said she would go to a higher appeals court on Monday.
A second man questioned about the scandal was freed without charge over the weekend.
France's second biggest bank is now facing the tough task of rebuilding its balance sheet to offset the losses from soured bets on the future direction of European stock indexes.
It has also suffered $4bn of losses linked to investments centred on US sub-prime home loans, for which there is no longer any appetite.
Societe General first revealed plans to raise 5.5bn euros in new capital on 24 January, when details of the scandal emerged.
It said shareholders can buy one share for every four held, but some analysts and market watchers were surprised by the steep discount on offer.
"The price is very low. The feedback from the market cannot have been very encouraging," said Pierre Flabbee, banking analyst at Landsbanki Kepler.
Societe Generale's shares dropped 2.9% in morning trade to 75.40 euros.