January 4, 2019 / 7:12 AM / 6 months ago

Italy's Treasury in talks with Carige to buy soured loans - paper

MILAN, Jan 4 (Reuters) - The Italian Treasury is in talks with Banca Carige to acquire around 3.7 billion euros ($4.2 billion) of soured loans to help clean up the troubled lender’s balance sheet, Il Messaggero said on Friday.

The Treasury’s bad bank, previously used in the rescue of Banca Monte dei Paschi di Siena and two Veneto banks, has been talking with Carige since Christmas, the paper said.

Cleaning up Carige’s balance sheet would be a prerequisite to making the lender more appealing for a merger, Il Messaggero said.

On Wednesday the European Central Bank picked three administrators to take charge of Carige to save the struggling lender after it failed to raise new capital.

Il Messaggero cited a letter sent by the ECB to the bank saying Carige “shows a series of persistent critical problems in terms of capital, liquidity and governance”.

The Italian government said on Wednesday that Prime Minister Giuseppe Conte and Economy Minister Giovanni Tria were “personally” following developments at the bank.

According to Il Messaggero, Carige has around 2 billion euros of unlikely-to-pay loans and 1.7 billion euros of non-performing loans.

$1 = 0.8782 euros Reporting by Stephen Jewkes; Editing by Susan Fenton

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