Banco Popolare to seek mergers, freezes bad debt unit sale

MILAN, June 29 Sun Jun 29, 2014 9:46am EDT

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MILAN, June 29 (Reuters) - Italy's fourth-biggest lender Banco Popolare will look at merger opportunities once it has passed a Europe-wide health check of the sector, and has cancelled the sale of its bad debt unit for now, its CEO told daily Il Sole 24 Ore in an interview.

The bank later confirmed all the comments made by CEO Pier Francesco Saviotti in the interview published on Sunday.

Banco Popolare is one of 15 Italian banks under scrutiny by the European Central Bank's review of assets. The results of the review will come out later this year.

"With the conclusion of the ECB's review, I'm certain that Italy will also see a new wave of mergers," Saviotti said.

"As Banco Popolare, we are confident that we will pass the ECB's test and then we will not be indifferent to the opportunities that will arise. We are ready to play the role of aggregator in coming years."

In April, Banco Popolare completed a 1.5-billion-euro ($2 billion) share sale to boost its financial strength ahead of the European asset review, but is still grappling with one of the highest levels of soured loans among Italy's banks.

Saviotti told the paper he expects to get its stock of non-performing loans "under control" by the end of this year.

Banco Popolare has put up for sale a majority stake in its Release unit, which owns and manages soured loans and real estate assets with a gross value of 3.2 billion euros.

Saviotti told the paper Release had attracted interest from buyers in the real estate market and specialists in the management of non-performing loans, but the offers were "not compatible with the best interests of our shareholders".

Rather than selling the unit, the bank would now instead seek to "add value to the asset".

Saviotti added, however, that the lender would look for other ways of reducing its stock of non-performing loans. One option was to sell blocks of soured loans, and talks in that regard were already in progress. ($1 = 0.7331 Euros) (Reporting by Agnieszka Flak; editing by Keiron Henderson)

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