(Adds sources saying Carige board to meet on Wed, two
foundation board members quit)
By Andrea Mandala
MILAN Feb 25 Italian mid-sized bank Banca
Carige risks a delay to a vital 800 million euro ($1.1
billion) cash call to strengthen its balance sheet after its
largest shareholder sought to put off the bank's fundraising
Carige's chairman and chief executive met Bank of Italy
officials on Tuesday, a day after the charitable banking
foundation that has a 46 percent in the Genoa-based lender asked
to delay the cash call to mid-2014.
The bank's board will meet on Wednesday to discuss the
request from the Carige foundation, a source close to the matter
"The aim is to find a compromise," said the source.
Separately, two members of the foundation board strongly
opposed to a swift capital increase quit on Tuesday, another
source close to the situation said.
Banca Carige, the foundation and the Bank of Italy declined
Carige is one of five Italian banks set to raise a total of
7 billion euros in fresh capital this year to absorb rising bad
debts from the country's weak economy.
The dispute over the timing of cash call mirrors wrangling
that took place between management and the biggest shareholder
at Banca Monte dei Paschi di Siena, Italy's No. 3
Its main investor, also a charitable banking foundation like
Carige's, successfully pushed back to at least mid-May a
3-billion-euro capital hike the management had wanted to carry
out in January to get an early claim on investors' cash.
Carige's management want approval for its capital hike by
the end of March, a timetable that the Bank of Italy also
But the Carige foundation has no money to invest in it and
would face a major dilution of its holding.
The foundation said late on Monday it would either call an
extraordinary shareholder meeting to extend the March deadline
or let the rights issue be approved by then but carried out in
Charitable foundations became key shareholders in leading
Italian banks following the privatisation of publicly-owned
banks in the early 1990s.
After supporting banks' recapitalisation efforts in the
past, some foundation shareholders have become an obstacle to
fundraising plans as these would greatly diminish their
influence over lenders.
"There are no examples outside of Italy of charitable
institutions whose wealth is invested in just one class of
assets," said Stefano Gatti, finance professor at Milan's
"(This) has made the foundations' fortune during good times
but risks ruining them now that things have changed."
Failure to boost Carige's capital base by mid-year would
likely result in Carige failing to meet minimum standards set by
the European Central Bank (ECB) as part of its Europe-wide
health check of banks.
Carige, one of 15 Italian banks currently under ECB
scrutiny, had a Core Tier 1 ratio of 5.8 percent at the end of
September. The ECB wants banks to have a Common Equity Tier 1
ratio, a more stringent measure of financial health than the
Core Tier 1, of at least 8 percent.
"The foundation would like to gain more time, in the hope it
can sell a portion of its stake to some strategic partners and
hoping that a sale of insurer Carige Assicurazioni might reduce
the size of the cash call," said Luca Comi, an analyst at ICBPI,
referring to an insurance subsidiary of the bank.
"Time is running out. The meeting at the Bank of Italy today
may help clarify the central bank's stance."
(Additional reporting by Lisa Jucca and Valentina Za; Editing
by Jane Merriman and Pravin Char)