Italy's BPER selected for Carige rescue deal

Credit: REUTERS/Stefano Rellandini

By Andrea Mandala and Valentina Za

MILAN, Jan 10 (Reuters) - The Italian banking fund that owns Carige CRGI.MIfollowing a 2019 rescue on Monday picked BPER Banca EMII.MI to negotiate a sale it hopes will end a seven-year crisis at the ailing lender.

Carige and bigger rival Monte dei Paschi di Siena BMPS.MI are the two main banking headaches Italy must tackle to end a restructuring started in 2015 that has cost healthy lenders more than 10 billion euros ($11 billion).

After failing last year to sell state-owned Monte dei Paschi to heavyweight UniCredit CRDI.MI, Italy has tabled 380 million euros in gross tax incentives to ease Carige's disposal.

Following a meeting of its steering committee on Monday, the FITD fund that owns 80% of Carige said BPER would have four weeks to study the target's financial data in order to agree on a sale no later than Feb. 15.

Italian banks spent 600 million euros to rescue Carige through the FITD fund, which must now pump more money into it to clinch a sale.

Suitors BPER, Credit Agricole Italia CAGR.PA and U.S. fund Cerberus had all offered a token 1 euro and requested cash to cover restructuring and clean-up costs.

After initially demanding a 1 billion euro capital injection, which FITD rejected because it topped the 700 million euros it could spend, BPER on Saturday lowered the cash request below that threshold, people close to the matter said.

BPER would then buy out remaining investors in Carige at 0.80 euro a share, FITD said.

Shares in Carige closed up 1% at 0.894 euro, having gained more than a third since mid-December, when news of interest from BPER and Credit Agricole Italia first emerged.

BPER, Italy's fifth-largest bank, was the favoured bidder, with the country's authorities keen to see mid-tier lenders tie up and some FITD members wary of further expansion by Credit Agricole Italia, the largest foreign lender in the country.

The Italian arm of France's Credit Agricole last year bought small peer Creval for 1 billion euros, and in 2017 clinched a rescue deal with FITD for three failing banks.

BPER has been steered onto an expansion path by its leading shareholder, insurer UnipolSAI US.MI, and last year boosted its assets by 40% by buying branches sold as part of Intesa Sanpaolo's ISP.MI takeover of UBI.

Carige would further lift BPER's assets to around 155 billion euros, making it Italy's No.4 bank and a more direct competitor to Banco BPM BAMI.MI, the No.3 and a longstanding possible merger partner.

"The potential BPER-Carige deal would move further away the possibility of an integration between BPER and Banco BPM," Intesa Sanpaolo analysts said.

With a cost-to-income ratio of 93%, Carige would "need the full attention of management and time" to be restructured once acquired, Intesa said.

BPER worked with Rothschild, while KMPG and Deutsche Bank advised FITD.

($1 = 0.8823 euros)

(Editing by Jan Harvey and Richard Chang)

((valentina.za@thomsonreuters.com; +39 02 6612 9526;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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