June 9, 2014 / 11:16 PM / 3 years ago

UPDATE 1-Top investor in Carige sells 11 pct stake

(Updates with sale of stake by foundation)

By Andrea Mandala

MILAN, June 9 (Reuters) - The top investor in Banca Carige sold 10.86 percent of the Italian mid-sized bank on Monday, days ahead of a planned 800 million euro ($1 billion) share sale needed to boost the lender's capital base.

In a statement, the main banking foundation shareholder Fondazione Carige said it had sold the stake for about 91.2 million euros to institutional investors.

Earlier on Monday a source close to the matter said the foundation planned to sell 10.9 percent of the Italian mid-sized bank by Tuesday.

The cash-strapped banking foundation, which until recently controlled almost half of Carige, struggled last month to sell an 11 percent stake in the scandal-hit lender, sending its shares down 17 percent.

The foundation said on Monday after the sale it held around 19 percent of the bank whose cash call is expected to start next week.

The not-for-profit entity forced a delay in the rights issue as it had no money to invest in it and hoped to find friendly investors to buy part of its holding.

In May the foundation had to offer a larger-than-planned 20 percent discount to sell 11 percent of the Genoa-based bank on the market. It had initially targeted selling 15 percent.

Traders said rising risk-aversion ahead of last month's European parliamentary elections and concerns about the quality of the asset had weighed on the sale.

Shares in Carige, whose long-standing former chairman is under house arrest in a investigation into alleged fraud, closed down 2.5 percent.

The foundation is hoping to raise enough to be able to buy into the rights issue and keep its stake at 19 percent. Its board is set to meet later this week to decide on the matter.

Analysts expect Carige to offer a discount of between 30 and 40 percent on the new shares as it strives to bring its core capital above a minimum 8 percent threshold set by the European Central Bank, in a review of banks across the euro zone this year.

Bigger rival Monte dei Paschi di Siena on Monday launched a 5 billion euro cash call, pricing new shares with a 35.5 percent discount to the theoretical price of the stock when excluding subscription rights.

Carige posted a 2013 net loss of 1.76 billion euros, hit by loan-loss provisions and writedowns on the value of past acquisitions in a balance-sheet clean-up under new management.

Giovanni Berneschi, ousted as the bank's chairman in 2013, 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.

$1 = 0.7345 Euros Additional reporting by Stephen Jewkes, Writing by Valentina Za; Editing by Paola Arosio, David Holmes and Cynthia Osterman

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