Ital­ian banks’ sur­vival at stake on stock list­ing

The Pak Banker - - COMPANIES/BOSS -

Banca Popo­lare di Vi­cenza SCpA will ask share­hold­ers Satur­day to ap­prove a sur­vival plan that de­pends on find­ing in­vestors will­ing to buy as much as 1.8 bil­lion euros ($2 bil­lion) of stock in the loss-mak­ing, cash-starved len­der.

Fail­ure to carry out an ini­tial pub­lic of­fer­ing to raise cap­i­tal by the end of April may lead to su­per­vi­sory mea­sures, in­clud­ing the bank's res­o­lu­tion, the Euro­pean Cen­tral Bank said in a let­ter pub­lished by the Ital­ian bank this week. Share­hold­ers must also agree to con­vert to a joint-stock com­pany.

Popo­lare di Vi­cenza, the coun­try's 10th largest bank with about 40 bil­lion euros of as­sets, is among Ital­ian lenders un­der pres­sure from Europe's new bank­ing su­per­vi­sor to shore up their fi­nances. Ital­ian bank shares and bonds have tanked this year over fears that lenders have yet to come to terms with more than 360 bil­lion euros of bad loans clog­ging their books.

Popo­lare di Vi­cenza, a co­op­er­a­tive bank, em­ploys 5,500 peo­ple at more than 600 branches. Its cur­rent share­hold­ers are mainly cus­tomers who al­ready lost most of their in­vest­ment on write­downs that have shaved about 90 per­cent from the book value in re­cent years.

"I ex­pect share­hold­ers will back those un­pleas­ant mea­sures, sim­ply be­cause they have no al­ter­na­tives to al­low the bank to sur­vive," said Wol­fram Mrowetz, chair­man of Ali­sei SIM, a Mi­lan bro­ker­age. It will be the third time the bank has tapped in­vestors in as many years, hav­ing raised 1.2 bil­lion euros be­tween 2013 and 2014. Those cash calls are un­der in­ves­ti­ga­tion af­ter an ECB in­spec­tion re­vealed that the bank lent money to cus­tomers to buy the shares, ar­ti­fi­cially boost­ing re­serves. In some cases man­agers al­legedly signed let­ters guar­an­tee­ing the bank would re­turn or re­pur­chase the shares.

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