Carige should be able to guarantee its appeal in the market

MILAN (Reuters) – Banca Carige is expected to sign by the end of the weekend, perhaps even as early as Friday evening, an agreement with banks to vouch for its capital increase of 560 million euros, a-t-on learned from a source close to the folder.

The Italian school, of which the balance sheet is weighted down by a significant amount of bad loans, must improve its capital adequacy ratio by the end of the year at the request of the european central Bank, under penalty of being put in liquidation.

The bank of genoa also provides for asset disposals and an exchange of debt to rectify its financial situation.

All the conditions for an agreement of subscription to the capital increase are met, and only a few details remain to be settled, the source said. Carige should be able to launch its capital increase towards the middle of next week, added this person.

“The subscription contract will be finalized this weekend, perhaps as early as this evening,” the source said Friday.

Carige hoped to conclude an agreement last Wednesday, with Credit Suisse, Deutsche Bank (DE:DBKGn) and Barclays (LON:BARC), but last minute difficulties have led these institutions not to commit to purchase the securities which would not be placed at the end of the operation.

The managing director of the bank, Paolo Fiorentino, has multiplied the meetings this Friday to try to save this call in the market.

A failure of Carige would weaken again the Italian banking sector, crippled in its entirety by the accumulation of more than 300 billion euros of bad loans, nearly a third of all “non-performing loans (non-performing loans, NPL) of the banks in the euro area.

(Valentina Za and Andrea Mandala; Bertrand Boucey for the French service)