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UPDATE 1-Carige plans asset sales to avoid big capital increase
March 20, 2013 / 4:33 PM / 5 years ago

UPDATE 1-Carige plans asset sales to avoid big capital increase

* Bank needs to shore up capital by 800 mln euros

* To sell insurance businesses, possibly real estate assets (Adds details, background)

By Andrea Mandala and Silvia Aloisi

MILAN, March 20 (Reuters) - Italian regional lender Banca Carige wants to sell insurance businesses and property to avoid having to raise money from shareholders to plug an 800 million euro ($1.03 billion) hole in its capital base.

The bank’s director general Ennio La Monica told analysts proceeds from asset sales could provide most of the money.

“We think that (with the asset sales) we can reasonably get very close to 800 million euros.” As a result, he said the capital hike would be “very marginal.”

The bank’s chairman, Giovanni Berneschi, initially said on Wednesday the bank needed a capital increase of 400 million euros, which would likely mean a big dilution for Carige’s main shareholder, a charitable foundation with close ties to local politicians.

Berneschi later said in an emailed statement he hoped the capital increase would be as small as possible.

The bank, based in Genoa, first revealed its capital shortfall last month, prompting the Italian press to draw parallels with Monte dei Paschi, the troubled Tuscan bank, which also has a charitable foundation as its main shareholder.

Monte Paschi had to request 4 billion euros in state aid last month after failing to meet tougher capital rules set by European regulators and after disclosing losses of 730 million euros linked to risky derivatives trades.

La Monica said Banca Carige planned to sell its two insurance units, which he said were worth between 400 million and 600 million euros. Real estate assets could also be put up for sale, he said.

The bank, which has a market capitalisation of 1.3 billion euros, said late on Tuesday it made a 2012 loss of 63.2 million euros. It scrapped its dividend and said it would cut bonuses for its top managers to comply with recommendations from the Bank of Italy.

The central bank has told banks with a low Core Tier 1 ratio, a key measure of financial strength, not to pay a dividend. Carige’s Core Tier 1 stood at 6.7 percent at the end of 2012, well below the 9 percent minimum its bigger rivals have been told to meet.

Less than a month ago, Carige had said it still planned to pay an adequate dividend for 2012.

The Carige foundation has a 47 percent in the bank and in the past used dividends to fund social projects locally. In 2011, the bank’s dividends represented 85 percent of the foundation’s revenues.

The prospect of a large capital increase weighed on Carige’s shares, which fell 3.5 percent to 0.57 euros. The stock has lost 44 percent of its value in the past year.

$1 = 0.7760 euros Reporting by Andrea Mandala and Silvia Aloisi. Additional reporting by Gianluca Semeraro. Editing by Jane Merriman

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