Bank of Italy demands management change at Carige-sources
* Bank needs to appoint qualified managers to restructure-source
* Regulator found Carige lending practices inadequate-report
* Carige needs 800 mln euros to plug capital gap
By Valentina Za
MILAN, Sept 3 (Reuters) - The Bank of Italy is demanding new management at Carige to overhaul lending practices to help the mid-sized bank shore up its balance sheet to meet capital rules, two sources familiar with the situation said.
Newspaper Il Secolo XIX reported on Tuesday that a central bank inspection at Carige had shown "widespread inadequacies in management and control systems which impacted its risk taking policies." It quoted a letter signed by governor Ignazio Visco.
The regulator is pushing smaller Italian banks to tidy up their balance sheets before it hands over supervision of the sector to the European Central Bank next year. Analysts expect some banks will have to either merge or request state aid if they cannot raise fresh capital to cope with a rising tide of bad loans.
Banca Carige Spa, whose market capitalisation is 1.1 billion euros ($1.45 billion), must raise 800 million euros by the end of the year to meet bank capital rules.
The Italian central bank has written to Carige, asking it "to appoint a new board, including a new chairman and chief executive, and new auditors, picking highly qualified professionals that can help it sort its problems," a source with direct knowledge of the matter said.
A second source confirmed the Bank of Italy's request.
The central bank also asked the bank to tighten internal controls and revamp its business plan to target higher profitability, the first source said.
Carige and the Bank of Italy declined to comment.
The Genoa-based lender is striving to sell assets to avoid a capital increase that would reduce the influence of its main investor. The Carige foundation, a charitable entity with close ties to local politicians, owns 46.6 percent of the bank.
Clashes between the foundation and the bank's long-standing Chairman Giovanni Berneschi led in August to the resignation of the majority of Carige's board.
The foundation meets on Wednesday to ready new board candidates. Shareholders meet on Sept. 30 to elect the board.
Shares in Carige fell 2.3 percent, underperforming a flat Italian all-share stock index.
The regulator said "anomalous" bank loans were 17 percent of assets, mentioning "excessive support lent to leading businessmen which also include shareholders and correlated parties," the paper said.
The Genoa daily said Visco's letter was dated Aug. 28. On the same day the Carige foundation issued a statement saying it was ready to cut its stake.
On Tuesday, Fitch Ratings said Italian banks with weak governance had suffered the most during the euro zone's crisis and were under pressure to boost transparency.
Fitch mentioned Carige and co-operative Banca Popolare di Milano, which is also in the process of revising its governance following indications from the Bank of Italy. ($1 = 0.7582 euros) (Additional reporting by Lisa Jucca; Editing by Anthony Barker and Louise Heavens)
- Protesters fell Lenin statue, tell Ukraine's president 'you're next'
- Four dead in apparent Connecticut murder-suicide
- South Korea expands air defense zone to partially overlap China's |
- Singer Susan Boyle reveals she has Asperger's syndrome: paper
- Dynasty's Congress party punished in Indian state elections