July 26, 2018 / 11:47 AM / a month ago

UPDATE 1-Carige's top shareholder says no friction with ECB

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MILAN, July 26 (Reuters) - The top shareholder of Italy’s Banca Carige denied on Thursday any friction with the European Central Bank, which has expressed concern over a governance crisis at the mid-sized lender.

Vittorio Malacalza, a local businessman whose holding company holds 20.6 percent of Carige, has asked for the board to be removed saying the current top management is not suited to oversee further measures demanded by the ECB.

The ECB has given Genoa-based Carige, the last remaining large problem bank in Italy, until Nov.30 to submit a plan to fill a gap in its second-tier capital by the end of the year.

Carige could win more time if it embarked on a merger with a stronger peer, but shareholder infighting, a high bad loan burden and poor profitability make Italy’s 10th largest bank a tough sell.

Malacalza said on Thursday that the leak of a letter he received from the ECB, dated July 24, had “fuelled reports of an alleged conflict” between him and the regulator.

“There are no frictions between the ECB and I, and all our exchanges of opinions, including this last one, have always been ... aimed on both sides at pursuing the bank’s best interest,” Malacalza said in a statement.

The ECB declined to comment.

Carige said on Sunday that the ECB saw risks for the bank’s operations and reputation from its malfunctioning governance. The supervisor has called for the swift appointment of a new chairman saying strong leadership is needed, Carige said.

Carige’s Chairman Giuseppe Tesauro, who was backed by Malacalza, resigned at the end of last month in protest against the way CEO Paolo Fiorentino has been running the bank.

Malacalza, who was deputy chairman, replaced Tesauro only to step down himself two weeks later. His resignation will only be effective after a September shareholder meeting that will appoint a new chairman. (Reporting by Valentina Za; Editing by Kirsten Donovan)

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