June 24, 2019 / 2:26 PM / 4 months ago

Italian banks reject Apollo's rescue plan for Carige

ROME (Reuters) - Italy’s banking fund FITD said on Monday it had rejected a rescue plan presented by a private equity fund for ailing lender Banca Carige.

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

In a statement, the fund did not name the private equity but sources had told Reuters last week that U.S. private equity fund Apollo Global Management, which already owns Carige’s insurance units, had presented its offer.

The FITD did not give a reason for the rejection on Monday but only said that it “was not in a position to accept a private equity fund’s draft plan in its current state”.

However, one source close to the bank said Apollo was expected to present a new rescue plan in the coming hours.

FITD added it was ready to consider alternative solutions involving the bank’s current shareholders and other private or public investors.

Carige, which was placed under special administration by the European Central Bank in January, has a capital shortfall of 630 million euros ($717 million).

Carige’s temporary administrators have been trying to find a buyer for months but their efforts were thrown into disarray last month when BlackRock pulled out of a proposed rescue plan.

That plan included the conversion into equity of a 320 million euro bond held by the FITD deposit guarantee fund.

FITD said it would start a detailed analysis of Carige’s

capital needs on Tuesday.

Bank rescues are sensitive in Italy, where an anti-establishment government has campaigned against EU “bail-in” rules that limit the use of public money to prop up ailing lenders.

EU antitrust regulators blocked the rescue of Tercas in 2015 because it was carried out with money from FITD.

Brussels considered the bailout breached EU state aid rules because it said the fund had acted on behalf of the Italian state, effectively providing unfair subsidies to the bank.

The EU General Court overturned that decision in March, ruling that the fund had acted independently.

A source close to the FITD, said on Monday, that thanks to this ruling, the FITD, which has 1.5 billion euros of liquidity, could inject cash into Carige without breaking EU antitrust rules.

However, the European Commission appealed against the EU court ruling last month, paving the way for a long legal dispute which could prevent the Italian government from using the easier terms of the Tercas rescue for future bank bailouts.

Reporting by Stefano Bernabei, writing by Giselda Vagnoni, editing by Giulio Piovaccari and David Evans

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