November 23, 2017 / 9:25 AM / a year ago

Italy's Creval says cash call will prep bank for 'unavoidable' M&A

MILAN (Reuters) - Creval’s 700 million euro ($828 million) new share issue will succeed and put the mid-sized Italian bank in tip-top shape for a merger which is “unavoidable”, its director general said.

Creval rocked Italian banking shares this month by announcing a larger-than-expected stock issue as it stepped up goals for bad loan reduction.

Italian lenders are under pressure by regulators to get rid more quickly of soured debts left behind by a recession. Lengthy recovery procedures in Italy mean sales are the fastest solution, but they burn through precious bank capital.

“We were at a fork in the road: we could have proceeded at a slow speed or take the bull by the horns as we did ... to do away with the legacy from 10 years of crisis and restore profitability to a satisfactory level,” Mauro Selvetti told Reuters late on Wednesday.

“I’m very confident on the cash call,” he added. “We don’t want to miss a rendezvous with M&A which we consider unavoidable as markets are pushing in that direction. If and when that happens, we want to be in the best shape possible,” he added.

Reporting by Valentina Za and Andrea Mandala, editing by Agnieszka Flak

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