Italian banks’ survival at stake on stock listing
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.