Business World

Tuesday 16 July 2019

Italy struggles to rescue floundering lender Carige

Bad loans: Carige bank is at risk of collapse
Bad loans: Carige bank is at risk of collapse

Giuseppe Fonte and Stefano Bernabei

Italy is struggling to pull together a rescue plan for Carige, the troubled Genoa-based bank, sources familiar with the matter said.

Weakened by decades of mismanagement, Carige is the latest Italian bank that is at risk of collapse as a result of bad loans left over from the country's deep recession.

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The European Central Bank placed Carige under special administration at the start of the year after a failed capital raising, but efforts to find a buyer as demanded by regulators have so far proved fruitless.

The latest attempt to salvage the troubled lender revolves around a depositor protection fund (FITD) financed by Italian banks which, one of the sources said, would provide €520m in fresh capital out of a total of €800m needed to save the bank.

The Italian Treasury favours the FITD plan but it has run into problems because of the funding shortfall of €300m, one of the sources claimed.

The FITD fund last month said it was studying a rescue of Carige alongside other private and public investors.

The Treasury was not available for a comment.

Meanwhile, UniCredit and regional bank Bper Banca have come forward offering to take over Carige if the country's state-owned "bad bank" SGA agrees to take on up to €12bn - €13bn in soured loans, the sources said.

UniCredit and Bper both declined to comment.

UniCredit has previously said it would back a "systemic solution" for Carige involving all Italian banks in a "fair and proportionate" way.

Bper, based in Modena in northern Italy, has said any solution for Carige should have a neutral impact on the buyer's balance sheet.

The proposals by UniCredit and Bper both envisage the economy ministry injecting €1bn into SGA so it could help Carige and its buyer to offload bad debts.

The sources said two state-owned banks, Credito Sportivo and Mediocredito Centrale, could also provide support to Carige, as well as unlisted cooperative banking group Cassa Centrale Banca.

All of the interested parties declined to comment.

Carige's current shareholders, which include the Malacalza family of steel billionaires as the single largest investor with a 27pc stake, could also pitch in.

Reuters

Irish Independent

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