* CEO says boosting capital is priority due to ECB's review
* Seven Italian banks under ECB scrutiny planning cash calls
* Veneto Banca says board discussed capital-boosting options
(Adds CEO comments, details)
By Valentina Za
MILAN, March 4 Credito Valtellinese
plans to raise up to 400 million euros in cash from investors by
mid-2014, joining a growing list of Italian banks seeking to
strengthen their balance sheets as they come under scrutiny in a
sector health check.
The mid-tier bank said on Tuesday the rights issue would
bring its best-quality capital to 10.9 percent, above a minimum
threshold of 8 percent set by the European Central Bank for
lenders it is reviewing across the euro zone.
Credito Valtellinese is one of 15 Italian banks targeted by
the ECB's check up.
Seven of them are now planning to raise fresh capital for a
total of more than 7.5 billion euros ($10 billion). As recently
as Saturday Banca Popolare di Sondrio said it would
tap investors for up to 350 million euros.
"A stronger capital allows us to look upon the whole ECB's
asset-quality review with greater tranquillity," Credito
Valtellinese's Chief Executive Miro Fiordi told analysts during
a conference call.
"The ECB's comprehensive assessment and stress-tests are the
No.1 priority in 2014."
Fiordi said that once it cleared that hurdle the bank might
use its capital buffer to boost lending as the Italian economy
recovers, or absorb the hit from further writedowns on bad loans
it would then try to sell.
"Let's see what resources are left once we've crossed that
river, hopefully many," he said.
Mediobanca, Banca IMI and Credit Suisse
are guaranteeing the cash call, and the bank is also in advanced
talks to sell 40 million euros in non-performing loans, Fiordi
That compares with a total of 2.7 billion euros in
problematic loans at the end of last year net of writedowns, the
bank said on Tuesday, as it reported a net profit of 11.7
million euros for 2013.
Italian banks are struggling to get rid of bad loans as
market prices for these assets are below their book value and
further writedowns would be necessary to be able to sell them.
Credito Valtellinese is in talks with Mediobanca
about the investment bank's project to help groups of smaller
banks offload bad debts by setting up one or more special
Separately on Tuesday, unlisted Veneto Banca, which is also
under ECB scrutiny, said its board had discussed
capital-strengthening options and would unveil any decision
after publishing full-year results on March 18.
Sources had told Reuters earlier on Tuesday Veneto Banca was
weighing options to boost its capital, including a possible
rights issue, as it strives to meet a 9.5 percent target for its
common equity capital by mid-2014 from 7.2 percent at the end of
($1 = 0.7277 euros)
(Additional reporting by Andrea Mandala and Silvia Aloisi,
editing by William Hardy)