April 11, 2019 / 10:05 AM / 6 months ago

ECB extends deadline for binding bids for Italy's Carige to mid-May: sources

MILAN (Reuters) - The European Central Bank has pushed back a deadline to submit binding bids for troubled Italian lender Carige to mid-May so as to give a specialist fund run by BlackRock more time, two sources familiar with the matter said.

FILE PHOTO: The Carige bank logo is seen in Rome, Italy, April 16, 2016. REUTERS/Stefano Rellandini/File Photo

The BlackRock fund is the only group still known to be considering a bid. One of the sources said it needed more time to study a possible offer, given all the moving parts involved.

Carige was placed under special administration at the start of the year after its top investor blocked a planned capital raising, derailing an industry-financed rescue plan.

The ECB has asked the three commissioners it put in charge of the Genoa-based bank to find a buyer for Carige, which needs to fill a 630 million euro ($710 million) capital shortfall.

The commissioners’ mandate has recently been extended to the end of September, matching a deadline established by government decree for the state to inject up to 1 billion euros into the bank if a private solution fails.

The ECB has now also extended by six weeks an original April 5 deadline to submit bids, one source said. The first source said there was no new set deadline but “a process made up of several steps which is expected to conclude in the first part of May.”

One such step concerns a possible conversion into equity of a 320 million euro hybrid bond that healthy Italian banks bought from Carige late last year to help the bank beef up its total capital.

Converting the bond into equity would reduce the investment needed to fill Carige’s capital gap.

A third source close to the matter has said that a “substantial conversion” could become necessary as part of the BlackRock fund’s plan for Carige.

Most Italian banks are unwilling to become shareholders in Carige via the bond conversion, however, which is also subject to a very complex voting procedure involving all banks that financed Carige’s rescue.

Another possible hurdle is that any bidder would need to win over Carige’s top shareholder, the Malacalza family, or would risk being voted down at a shareholder meeting called to approve the capital raising and any deal.

The Malacalzas, billionaires who built their fortune on steel, own 27.6 percent of the lender after investing more than 400 million euros for a stake worth just some 23 million euros based on market prices before trading in Carige shares was suspended indefinitely.

Reporting by Elvira Pollina and Andrea Mandala, editing by Valentina Za and Alexandra Hudson

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