Fund to save ailing Italian banks
(14 October 2015 – Italy) In a bid to stop a capital shortfall of around €2.2 billion (A$3.47 billion), Italy is in the process of rescuing three banks using a fund financed by other lenders, Reuters has reported.
Following audits, the country’s central bank has placed Banca Marche, Banca Popolare dell'Etruria and Cassa di Risparmio di Ferrara (Carife) -- under special administration after it found anomalies in their accounts.
The fund pledged last week to underwrite a share sale at Banca Marche, with sources putting the amount at around €1.2 billion.
That pledge followed Carife in July approving a €300 million share issue reserved to the deposit-guarantee fund.
While the fund has yet to decide how much it needs to issue to assist lender Popolare dell'Etruria, the estimate is for approximately €300 million, sources told Reuters.
In addition to this, €400 million of subordinated bonds issued by Banca Marche will be changed into shares of the bank in line with new bail-in" rules that shift the burden of saving failing banks from taxpayers to investors.
The fund said last week it needed a green light from the European Central Bank before becoming the controlling investor in Banca Marche.
According to another source, the plan may cost heavyweights that are the top contributors to the fund, such as Intesa Sanpaolo (ISP.MI) and UniCredit (CRDI.MI), around €200 million each, said Reuters.
With a large portion of Italy's 650 banks being small and focus on lending to businesses, they were hardest hit by the economic downturn as large loan writedowns decreases their capital base and pushed them into the red.
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