October 10, 2017 / 4:14 PM / a year ago

Intesa, Generali take up Carige's debt exchange offer

MILAN (Reuters) - Two major creditors of Banca Carige (CRGI.MI) have taken up a debt exchange offer which is a key plank of the troubled Italian bank’s capital raising efforts, sources close to the matter said.

After Rome rescued larger rival Monte dei Paschi di Siena (BMPS.MI) and liquidated two failing regional banks this year, Carige has come into focus as the last large Italian bank still in difficulty following a deep recession.

The European Central Bank has given Italy’s ninth-largest bank until the end of December to strengthen its capital.

Shares in Carige closed up 9 percent on Tuesday after the sources said Assicurazioni Generali (GASI.MI) and Intesa Sanpaolo (ISP.MI) would take up Carige’s debt swap.

Intesa Sanpaolo CEO Carlo Messina confirmed the conversion appeared as the best option.

“Our goal is to minimise the effect on our bank and it is reasonable to think that the conversion would have the smallest effect,” he told reporters in Vicenza.

Carige has offered to convert up to 510 million euros (455.74 million pounds) of its junior debt into senior-ranking notes. A deadline to take up the offer on better terms expires on Wednesday.

Intesa and Generali together hold a little more than 100 million euros of Carige’s junior debt. A source close to Unipol (UNPI.MI), another key creditor, has said the insurer is also ready to tender its junior notes.

Carige has said its business could be at risk if its capital plan, which includes a new share issue for up to 560 million euros and asset disposals in addition to the debt swap, does not go through.

Carige aims to reap around 200 million euros from the swap thanks to a capital gain generated by the below-par prices at which it is offering to convert the bonds.

Additional reporting by Riccardo Bastianello in Vicenza, writing by Valentina Za, editing by David Evans

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