September 6, 2013 / 12:26 AM / 4 years ago

Banca Carige names new board candidates in regulatory overhaul

MILAN, Sept 5 (Reuters) - Italy’s Banca Carige named candidates to replace its current board of directors on Thursday, saying it was committed to an overhaul demanded by the Bank of Italy after an inspection.

Carige said the principal problems highlighted by the Bank of Italy were exiting the insurance business, changing its credit policy and strengthening its capital base.

The Bank of Italy had demanded the mid-sized bank appoint new management to overhaul lending practices and shore up its balance sheet, sources told Reuters on Tuesday.

The Italian regulator has been pushing smaller banks, battered by the rising tide of non-performing loans during Italy’s longest recession since World War Two, to shore up their balance sheets before the European Central Bank takes supervision of the sector next year.

“A number of measures have already been taken and others are being studied with a view to being carried out soon,” the bank said in a statement.

Banca Carige Spa, which has a market capitalisation of 1.1 billion euros ($1.44 billion) and needs to raise 800 million euros by the end of this year to meet bank capital rules, said it was fundamentally stable.

An Italian newspaper reported on Tuesday that a central bank inspection showed “widespread inadequacies” at Carige, quoting a letter signed by the head of the central bank.

The Genoa-based lender said it would take legal action against whoever had leaked the letter from the Bank of Italy. ($1 = 0.7623 euros) (Reporting By Isla Binnie; Editing by Eric Meijer)

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