Cap hike sets up Pop Vicenza to lead wave of Italian bank mergers
MILAN/VICENZA (Reuters) - Banca Popolare di Vicenza is to tap shareholders for 1 billion euros ($1.4 billion) and looks set to use the cash to buy another bank, a move that may trigger a much-anticipated wave of mergers among smaller Italian lenders.
Smaller banks have borne the brunt of Italy's recession and are being encouraged by the Bank of Italy to merge to shore up their finances - a process which a sector-wide health check by the European Central Bank (ECB) is expected to hasten.
Pop Vicenza is the fifth bank to detail plans to raise capital by around mid-year out of 15 Italian lenders under scrutiny by European regulators, and said this will give it the wherewithal to make acquisitions and strengthen core capital.
Monte dei Paschi di Siena (BMPS.MI), Banco Popolare (BAPO.MI), Banca Popolare di Milano (PMII.MI), Banca Carige (CRGI.MI) plan to tap the market for a total of 6 billion euros, starting in April.
Popolare di Vicenza Chairman Gianni Zonin has long said he expects the number of Italian banks to halve in three-to-five years' time from nearly 700 now as Italy struggles to emerge from the longest recession since the end of World War Two.
His bank, based in the wealthy northeastern region of Veneto, has expressed interest in Popolare Etruria (PEL.MI) and Veneto Banca, two smaller cooperative lenders who have been told by the central bank to find a buyer.
"Veneto Banca and Pop Etruria are two operations we are considering, as are others," Zonin told a news conference on Tuesday, noting that no deal was imminent.
"We may talk about it after the shareholder meetings," he said. Italian companies normally hold their annual shareholder meetings by the end of April.
A source with knowledge of the matter said: "(Popolare Vicenza) is looking at a number of options, no decision has been taken yet. It is raising capital to be ready to move."
Shares in Pop Etruria rose after Pop Vicenza confirmed the capital increase, ending up 2.9 percent at 0.74 euros.
Pop Vicenza's Managing Director Samuele Sorato said the bank's common equity tier 1 ratio - a key measure of financial strength - would reach 12.5 percent after the capital increase, well above the minimum 8 percent threshold set by the ECB.
Bankers say Italy's so-called "popolari" banks are set to play a key role in the expected consolidation.
However, outside investors may be put off by their "one shareholder, one vote" structure which gives every shareholders the same influence over how the bank is run irrespective of the size of their holdings.
Popolare di Milano biggest investor, private equity fund Investindustrial, sold its 8.6 percent stake last month after its plan to turn the bank into a joint-stock company - as requested by the Bank of Italy - was defeated by unions and employee-shareholders.
"Given their governance structure, Italian popolari banks will only merge with other popolari," one senior banker said.
($1 = 0.7298 euros)