January 8, 2019 / 11:50 AM / 5 months ago

UPDATE 1-EU ready to discuss conditions of Italian state aid to Carige

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BRUSSELS, Jan 8 (Reuters) - European Commission officials are in contact with Italy’s government over its plans to shore up troubled lender Banca Carige and are ready to discuss the conditions for any aid, a spokesman said on Tuesday.

Rome approved a decree on Monday aimed at offering Carige access to a series of state-support options including recapitalisation.

“We take note of the adoption of the decree,” a spokesman for the Commission said in an emailed statement.

“We are in contact with Italy and stand ready to discuss with the Italian authorities on the availability and conditions of tools within the EU law framework,” he added.

Under EU rules, a state must notify the EU executive of any public support for companies so that the commission can check whether the funding is in line with competition rules.

Italy’s plan created the legal framework for possible state aid to Carige, but no aid has been provided yet.

Under the plan, Carige could benefit of a state guarantee on new bonds issued by the bank to improve its liquidity position.

Two years ago, the commission authorised a similar liquidity-support plan for two small Italian banks from the Veneto region, Banca Popolare di Vicenza and Veneto Banca, which were later liquidated.

Carige, which last year failed to secure shareholder backing for a capital increase, will also be able to request access to state-backed precautionary recapitalisation, if needed.

But according to a financial source close to the matter, Carige would only consider a request for precautionary recapitalisation if new and unforeseen problems arose.

Reporting by Francesco Guarascio; editing by Philip Blenkinsop and Andrew Heavens

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