Carige blames ECB rules for rescue woes.

Banks

The chief executive of Italy’s Banca Carige has criticised the European Central Bank’s publication of mooted new rules for soured loans, saying it complicated the private market rescue of the Italian mid-sized bank. Genoa’s Banca Carige early on Saturday became the first Italian bank rescue without state intervention or the use of government-sponsored backstop fund Atlante since Italy’s banking crisis began three years ago. Deutsche Bank, Credit Suisse and Barclays agreed to underwrite a €500m rights issue demanded by regulators by the end of the year after core shareholders pledged their support, allowing its restructuring plan to go ahead. The agreement capped a fraught 48 hours in which Carige shares were suspended after talks between the underwriting banks and core investors came to a halt over the terms of the deal. The uncertainty over its future roiled Italy’s bank stocks. In an interview with the Financial Times, Paolo Fiorentino, Carige chief executive, said the bank’s rescue talks were complicated by the publication last month of still-to-be-approved rules from the ECB indicating it expected to demand higher coverage for deteriorated loans from January. The ECB’s addendum “changed the terrain”, he said. Mr Fiorentino, a former UniCredit banker, added that Carige’s rescue deal was also complicated by the announcement of an unexpected €700m capital raise by Credito Valtellinese. The midsized bank, with a market value of €140m, was under pressure from regulators to shore up its balance sheet. “These two things in rapid succession threatened to close the institutional market,” Mr Fiorentino said. Carige is due to launch its rights issue on November 22, offering new shares at 0.01 cents each. Under the terms of the rescue deal, Italy’s financial heavyweights – Intesa Sanpaolo, Generali and Unipol – agreed to swap some of their subordinated debt in Carige into equity for a total amount of less than €60m, according to people involved in the talks. Intesa Sanpaolo’s equity stake amounted to less than €35m, one person said. Credito Fondiario also entered exclusive talks to buy €1.2bn worth of Carige’s non-performing loans. Boutique fund Algebris Investments also agreed to buy about 2 per cent of the capital increase. Carige “had a great client franchise demonstrated by clients sticking around in tough times,” said Davide Serra, Algebris chief executive. Rome has been in a tussle with Frankfurt and Brussels over the “addendum” arguing it would disproportionately hit Italian banks, which are only just starting to see a fall in non-performing loans run up during the sovereign debt crisis. Bankers see regulatory pressure on soured loans as forcing a round of consolidation on mid-sized Italian banks. Mr Fiorentino said he expected consolidation among Italy’s mid-sized banks to start “when the dust settles” following Italian elections expected as early as March next year. “We have no ambition to be a hunter but we hope to be able to be at the negotiating table”, with a cleaned up balance sheet following the rescue deal, he said.