Italy’s depositor protection fund (FITD) has opened up Banca Carige’s books to potential suitors in a bid to draw a line under the bank’s troubles by selling it off after rescuing it in 2019, three sources close to the matter said.
Three years ago Italy’s banks pumped 600 million euros into Genoa-based Carige through the FITD fund, which gained an 80% stake now valued at just 104 million euros.
Carige, bigger rival Monte dei Paschi and southern bank Popolare di Bari, are the three main problem banks Italy still needs to fix to complete a restructuring of the industry which it started in late 2015.
Banco BPM and Credem have signed non-disclosure agreements (NDA) to gain access to Carige’s books, the sources said. Both Banco BPM and Credem declined to comment.
Credem usually targets smaller players than Carige for bolt-on acquisitions, while Banco BPM has been looking for a sizeable merger deal and Carige would not fit the bill, bankers say.
Other banks, including BPER Banca and Credit Agricole Italia, are widely seen as potentially interested in looking at the data. Private equity funds could also take a peek, bankers say.
The FITD, financed by contributions from Italian banks, plans to receive non-binding offers by July and binding bids in the autumn to complete the sale by the end of the year, the sources said.
Carige needs a new buyer after unlisted Cassa Centrale Banca (CCB) in March decided not to exercise an option to buy FITD’s 80% stake.
Italian media has reported that CCB had offered to take on Carige for a symbolic price of 1 euro provided the FITD fund injected 500 million euros in capital, which the fund rejected.
Analysts predict that further losses loom for FITD in a sale of Carige, which is heavily exposed to the weak economy of the north-western Liguria region and is not expected to break even before 2023.
“We can say that the process would result in higher systemic charges for the system, as all Italian banks foot the bill of losses incurred by the FITD,” Mediobanca Securities said in a note.
Analysts say complicating a deal are legal risks weighing on Carige due to a lawsuit filed by a former top investor, as well as its weakened franchise, which has undergone a restructuring but where costs still eat up virtually all revenues.
But tax incentives on offer to promote mergers mean a buyer could potentially benefit from around 400 million euros in capital from tax credits in a merger deal.
Deutsche Bank is advising the FITD fund on the sale.
Source: Reuters.com