(Adds valuation, Etruria statement, background)
MILAN May 29 Italian mid-sized lender Banca
Popolare di Vicenza plans to acquire smaller rival
Banca Etruria for around 220 million euros as the
country's banks grapple with weak profitability and sluggish
The Bank of Italy told Banca Etruria last year to find a
buyer after an audit of its books unveiled insufficient
provisions against soured loans and an excessive exposure to
Bankers and analysts expect a wave of mergers in coming
years among Italy's 680 lenders, which are saddled with a large
stock of bad loans. The consolidation is likely to accelerate if
a health check of euro zone banks unearths any hidden risks in
balance sheets that will require them to boost their capital.
Headquartered in Italy's wealthy north-east, Popolare
Vicenza aims to boost its presence in the centre of the country
through Tuscany-based Banca Etruria, which has 186 branches
compared with Popolare Vicenza's 640.
Popolare Vicenza, one of 15 Italian lenders under scrutiny
by European authorities as part of the bank health check-up,
said on Thursday it would offer 1 euro per share in cash for
Popolare Etruria - valuing Etruria at around 217 million euros
That would be a 26 percent premium to the stock's closing
price on Tuesday, it said. Shares in Banca Etruria leapt as much
as 21 percent on Thursday after the terms of the proposed
takeover were announced.
"A cash offer on 100 percent of the capital is the best
outcome for minority shareholders, giving them a chance to cash
in the strong rise in the share price since the start of the
year," an Italian broker said.
Banca Etruria said in a statement it had received Popolare
Vicenza's offer on Wednesday and its board "will consider it
during its next meetings".
If the deal were to happen, it would be the second time this
year a healthier Italian bank has taken over a smaller lender
with the central bank's blessing.
In April, the Bank of Italy selected Banco di Desio e della
Brianza to rescue Banca Popolare di Spoleto,
which had been put under special administration for more than a
year because of alleged irregularities and large expected
Popolare Vicenza started exclusive talks last month with
Etruria after Italy's sixth-largest lender Banca Popolare
dell'Emilia Romagna failed to follow through on an
initial expression of interest.
Popolare Vicenza has repeatedly said it wants to expand its
branch network through mergers and recently launched a 1 billion
euro share sale to boost its capital base with a view to
Popolare Vicenza said it would launch its bid only after a
positive response by Etruria's board by June 12. It said the
buyout offer would be valid only if it acquired control of more
than 90 percent of Etruria's capital and it would then delist
Popolare Vicenza and Banca Etruria are both co-operative
lenders, meaning shareholders have one vote each regardless of
the size of their stake - something that could complicate the
approval of the merger offer. Etruria is set to become a
joint-stock company if Popolare Vicenza gains control of it.
($1 = 0.7345 Euros)
(Reporting by Valentina Za; editing by Tom Pfeiffer and Pravin