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Italy mulling rescue of three small lenders through banking fund-source
September 4, 2015 / 11:34 AM / 2 years ago

Italy mulling rescue of three small lenders through banking fund-source

ROME, Sept 4 (Reuters) - Italy is working on a plan to recapitalise three small banks that are currently under special administration by raising cash through a fund financed by healthy lenders, a financial source told Reuters on Friday.

The source said the amount to be raised had not be decided yet but another person familiar with the matter and data from some of the banks involved pointed to a total of at least 1.4 billion euros ($1.6 billion).

Holders of subordinated bonds issued by the three lenders could be asked to take part in the fund-raising effort by converting the notes into shares, the financial source said.

The three banks are Cassa di Risparmio di Ferrara (Carife), Banca Marche and Banca Popolare dell‘Etruria e del Lazio - which were all placed under special administration by the Bank of Italy because of serious capital shortfalls.

A shareholder meeting of Carife in July approved a 300-million euro capital increase reserved for the so-called Fondo Interbancario, a fund which is financed by all Italian banks and is meant to shield current account holders from losses of up to 100,000 euros each in case of a bank collapsing.

The financial source said that the same fund was mulling taking stakes in Banca Marche and Popolare dell‘Etruria.

Banca Marche needs around 1 billion euros in fresh capital, a source familiar with the matter said, while Popolare Etruria posted a loss of 126 million euros in the first nine months of 2014 - the last available financial data before it was placed under special administration earlier this year.

According to some newspaper reports, the bank could need as much as 500 million euros in fresh funds. ($1 = 0.8978 euros) (Reporting by Giselda Vagnoni, writing by Silvia Aloisi)

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