Fri, April 19, 2024

ECB Appoints 3 Admins to Italy’s Carige

European Equities Rally as ECB Hikes Price in

The European Central Bank designated three temporary administrators on Wednesday to take charge of Italy’s Carige bank in an unforeseen effort to save the floundering lender after it failed to raise new capital.

Italy’s 10th largest bank said the administrators would push for fresh talks with the country’s deposit guarantee fund, which lent it 320 million euros, or $364 million, via a convertible bond last year to help it meet a year-end deadline to boost capital.

Carige said that the administrators would continue working on measures to strengthen the bank’s capital, eliminate unpaid loans, and search for a possible merger partner.

The ECB stepped in for the first time since taking over as the euro zone’s top banking supervisor in 2014 after the Malacalza family of steel entrepreneurs refused to back a 400 million euro share issue last month.

The came after months of growing concern over the financial strength of Genoa-based Carige, which is the last major Italian bank considered to be a problem after the sector was hit by the financial crisis and Italy’s weak economy.

In a statement published late on Wednesday, the government said Prime Minister Giuseppe Conte and Economy Minister Giovanni Tria were “personally” following developments at Carige.

It said such close monitoring was the best way to guarantee capital consolidation and management strengthening at a bank seen as crucial for the economic re-launch of the Liguria region.

As per the reshuffle, Chairman Pietro Modiano and CEO Fabio Innocenzi would stay on as administrators together with Raffaele Lener, who is an outside legal expert that has worked at both Italy’s market regulator Consob and the Bank of Italy.

“Temporary administrators are tasked with safeguarding the stability of the bank by closely monitoring its situation, continuously informing the ECB and, if necessary, taking action to ensure that the bank restores compliance with capital requirements in a sustainable manner,” the ECB said.

Among the administrators’ first tasks with Italy’s depositors’ guaranteed fund (FITD), whose bond was meant to be reimbursed early this year after a successful share issue.

However, it could be converted into equity if the bank fails to raise capital by the 30th of June and falls short of the ECB’s requirement, giving Carige an option to boost its capital without tapping existing shareholders for fresh cash.

European lawmaker Sven Giegold called for an “in-depth state aid investigation” into the matter but the European Union’s antitrust chief said in a letter to him the bond did not appear to break the rules since it had been bought voluntarily by the private sector.

European Central Bank

Consob, which suspended Carige shares for the day after a request from the bank, said that the suspension would be extended until it was possible to resume full information disclosure on shares issued or guaranteed by the lender.

Italy’s banking index ended lower 1.2 percent.

The ECB’s move had been led by the deputy chair of Single Supervisory Board, Sabine Lautenschlaeger, because the new chair, Italy’s Andrea Enria, was only set to take office on January 2.

This followed the resignation of most of Carige’s board earlier on Wednesday and led to the removal of the bank’s management and control bodies.

YOU MAY ALSO LIKE

Last Week’s Stock Market Overview

Quick Look: Genuine Parts Company (NYSE: GPC) reported Q1 2024 results with

Oil

Quick Look: New sanctions targeting Venezuela’s crude oil sector affect US Gulf

Quick Look: The Electric Atlas features improved strength, range of motion, and

COMMENTS

Comments are closed.

BROKER NEWS

Plus500 Witnesses Growth in Q1 Revenue

In the first quarter, Plus500 reported a $215.6 million revenue, marking a 4% rise Y-o-Y and a 14% increase Q-o-Q. Customer income was $169.6 million, with $30.6 million coming from customer trading performance.

BROKER NEWS

Plus500 Witnesses Growth in Q1 Revenue

In the first quarter, Plus500 reported a $215.6 million revenue, marking a 4% rise Y-o-Y and a 14% increase Q-o-Q. Customer income was $169.6 million, with $30.6 million coming from customer trading performance. The