Listen to this article
This is an experimental feature. Give us your feedback. Thank you for your feedback.
What do you think?
The board of Italian mid-sized bank Carige was racing to bring a banking consortium and its biggest shareholders back to the table on Friday to support a €560m capital hike demanded by European regulators without which it faces being wound down.
Shares in Genoan bank Carige remain suspended for a second day on Friday. It closed on Wednesday with a market value of €124m.
Carige chief executive Paolo Fiorentino, a former UniCredit banker, is to meet representatives from Barclays, Credit Suisse and Deutsche Bank on Friday morning to try to rebuild the consortium that collapsed on Thursday, just as the rights issue was due to start.
Without the capital hike, the bank faces being wound down under the new European banking rules.
“In the course of the day, the top management of Banca Carige have continued to work, as they will do tomorrow, to finalise the consortium,” the bank said in a late night statement.
Uncertainty over the future of Carige has underscored renewed jitters about the Italian banking sector. The government and Italian bankers had hoped fears had been laid to rest over the summer with the state-sponsored recapitalisation of Italy’s fourth largest bank Monte dei Paschi di Siena and the winding down of two failing banks in the Veneto.
Adding to market nervousness, mid-sized northern Italian bank Credito Valtellinese, which has a market value of about €130m, announced this week a surprise capital hike of up to €700m to shore up its balance sheet.
Mooted new rules by the European Central Bank’s bank regulator requiring banks increase capital to cover soured loans has cast a pall over the sector, say bankers and Italian officials.
While Italy’s stock of non performing loans has started to fall from post-sovereign crisis highs, the banking sector still remain weighed down by bad loans.
Shares in Italy’s mid-sized banks have fallen since the publication of the so-called “Addendum” by the Single Supervisory Mechanism amid expectations they will be hardest hit and will need to raise additional capital. Bankers are hoping it may trigger a long awaited round of consolidation among banking mid-caps in Italy.
Analysts at Banca Akros speculated that in the current market conditions they did not exclude Banca Carige being put into resolution. “There would probably follow a separation of good and bad assets, with a recapitalisation of the bank by the state and the merger of the [good assets] of the bank into a bigger group,” Akros wrote.
People involved in the Carige talks said the banks backed out after Carige’s top shareholder the Malacalza family failed to turn up to a crucial meeting ahead of the launch of the issue, according to two people involved in the discussions. The Malacalza family had been seeking approval from European regulators to increase its stake in Carige from 17.6 to 28 per cent. A person involved in the talks said the Malacalza family had now gained that approval.