Italy's Carige says 800-mln euro cash call may not be enough

Sat Jun 14, 2014 1:54pm EDT

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MILAN, June 14 (Reuters) - Italian mid-sized bank Carige , which is launching an 800-million euro rights issue on Monday to bolster its financial strength, said it may be need further capital-boosting measures, particularly in view of a pan-European health check of lenders.

Carige is the latest Italian bank to tap markets for cash to strengthen its balance sheet in preparation for the review of banking assets across the euro zone, led by the European Central Bank.

Nine out of 15 Italian banks targeted by this year's check-up are raising 10.8 billion euros in total.

In the prospectus for the rights issue, Carige - which is also selling assets to raise its core capital - said it could not rule out that the review may find a hole in its accounts.

"Should the results of the comprehensive assessment exercise for Banca Carige highlight that the bank does not meet the minimum capital criteria required by the ECB, the supervisor authority could request the adoption of measures aimed at plugging the capital deficit observed," said the prospectus, posted on Carige's website on Saturday.

Carige said on Thursday it would offer new shares at a 40 percent discount to the theoretical stock price when excluding subscription rights, offering 93 new shares for every 25 already owned at 0.10 euros each.

The Genoa-based lender needs to bolster its best-quality capital ratio, which stood at 5.1 percent at the end of 2013, to bring it above an 8 percent minimum threshold set by the ECB.

The bank, which is being restructured under new management, posted a 2013 net loss of 1.76 billion euros, hit by provisions against risky loans and writedowns on past acquisitions.

In the prospectus it said it may have to set aside more money to cover for loan loss charges, and that could affect its future financial results and capital base.

The bank also said market regulator Consob - which has challenged its financial statement for 2012 and the first half of last year - was still examining its full-year 2013 accounts to assess whether the accounting criteria used were correct.

In the prospectus the bank referred to the judicial probe engulfing its former chairman Giovanni Berneschi, ousted in 2013. Berneschi was arrested last month along with six others on suspicion they had forced the bank's insurance unit to buy assets at an inflated price for their own profit, prosecutors said.

The bank, which considers itself the injured party in the probe, said it could not rule out that the investigation could widen and potentially lead to compensation claims against the lender, although this was a "mere hypothesis".

Chief Executive Piero Montani took over last autumn after the previous management was ousted following demands from Italy's banking regulator.

(Reporting by Silvia Aloisi, editing by William Hardy)

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