LONDON (Reuters) - Generali’s (GASI.MI) private bank BSI attracted bids below its estimated 2.3 billion Swiss francs ($2.5 billion) book value, four people familiar with the situation said on Tuesday.
A consortium made up of Spanish lender Bankinter (BKT.MC) and U.S. investment fund Apollo Global Management (APO.N) is seen as the frontrunner to buy BSI, although it offered “substantially less” than the insurer’s estimate in 2012 of its worth, two of the people with direct knowledge of the matter said.
That places Generali, which had set an April 30 final deadline for bids, in a tough situation as it needs to raise money but doesn’t want to sell assets too cheaply.
Italy’s Generali, which built up BSI through a series of acquisitions before the financial crisis hit, has been trying to sell BSI for more than two years, all the sources said. It is now left with two options: selling BSI for less than it thinks is its underlying value, or calling the sale off.
New Chief Executive Mario Greco is under pressure to raise 4 billion euros from non-core asset sales to shore up capital and restore value after long-standing CEO Giovanni Perissinotti was ousted by disappointed investors.
It is also selling its life reinsurance business in the U.S. in a deal worth between $800 million and $1 billion.
Generali, Bankinter and Apollo declined to comment.
Swiss private bank Safra and Chinese investment fund Hony Capital had earlier expressed an interest for BSI. It is however not clear if they are still interested, the sources said.
Safra declined to comment while Hony Capital was not immediately available for comment.
Generali could decide to call off the sale and explore other options such as a public listing of BSI, one of the sources said.
“This would buy them time in the hope BSI will post better results in the next quarter”, the source said.
Bankinter is one of Spain’s healthier banks, with less exposure than others to a damaging property boom and bust, which ultimately led Spain to ask Europe for a 40 billion euro bank bailout.
Bankinter still had to team up with a financial player to be able to bid for BSI, two of the people said. The bank announced on Monday it would seek to raise an additional 94 million euros in capital to meet new European solvency ratios.
Bankinter was also interested in acquiring Belgian bank KBC’s private bank KBL but lost it to Qatari-backed Luxembourg firm Precision Capital in 2011, one of the people said.
Japanese firms Mizuho Bank MZFGB.UL, Sumitomo Corp (8053.T) and players in Qatar and Abu Dhabi have also shown interest in BSI, but had not made offers by the deadline, all the sources said.
($1 = 0.9393 Swiss francs)
Editing by Elaine Hardcastle