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Governance row at Banca Carige risks delays to recovery plan
May 31, 2017 / 1:54 PM / 6 months ago

Governance row at Banca Carige risks delays to recovery plan

* Top shareholder wants removal of CEO

* Shares fall 6.4 pct

* Board to vote on CEO on June 9

By Valentina Za

MILAN, May 31 (Reuters) - Genoa-based Banca Carige , one of Italy’s problem banks, may have to delay a restructuring after its biggest shareholder called for the removal of the group’s chief executive Guido Bastianini.

The departure of Carige’s CEO would create more uncertainty over the bank’s future and add to pressure on Rome which is already negotiating a state bailout for larger rival Monte dei Paschi di Siena and two Veneto-based lenders.

The loss-making bank, heavily exposed to the northwestern Liguria region where it is based, has seen its bad debts swell during Italy’s deep economic recession.

The European Central Bank has told Carige to strengthen its balance sheet and bolster a core capital that lags behind the ECB’s minimum requirements.

The lender is planning to shed bad debts and raise 450 million euros ($504 million) this summer in its third cash call since 2014.

But that plan could be delayed after Carige said on Tuesday its top shareholder and deputy chairman Vittorio Malacalza had told the board he no longer had confidence in the CEO.

Banca Carige declined to comment.

Its shares were down 6.4 percent by 1244 GMT on Wednesday, having earlier lost as much as 8.4 percent.

The board will now hold a no-confidence vote on June 9 on Bastianini, who took the helm in April 2016 after Malacalza removed his predecessor.

Malacalza, a local businessman who has a 17.6 percent stake in Carige, has also criticised the bank’s chief financial officer. He told the board he would step down as deputy chairman if his stance was not backed by a large majority of directors.

Italian media said Bastianini might resign before the vote.

“The bank’s situation remains fragile,” broker Banca Akros said. “Negotiations with (ECB supervisors) may have to start again once the top management will be renewed.”

Malacalza became Carige’s biggest shareholder after investing 263 million euros, partly via the bank’s 2015 cash call at 1.17 euros per share. The stock traded at 0.2337 euros on Wednesday.

The bank’s second biggest shareholder is another local entrepreneur with 6 percent.

The ECB has told Carige to halve its gross soured loans to 3.7 billion euros by the end of 2019. The bank approved on Tuesday a first sale of 940 million euros in bad debts, repackaged as securities with a state guarantee.

It is looking for investors in a vehicle where it plans to spin off residual bad loans worth 2.4 billion euros.

To raise capital, Carige is also considering a possible conversion into equity of up to 660 million euros of bonds. Italian media said Malacalza and the CEO clashed over the size of the debt swap as the businessman fears an excessive dilution.

A spokesman for Malacalza was not immediately available to comment.

$1 = 0.8936 euros Editing by Jane Merriman

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