Carige Is Said to Be Sounding Out UniCredit, BNP, Banco BPM - EcoFinBiz Blog

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Carige Is Said to Be Sounding Out UniCredit, BNP, Banco BPM

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(Bloomberg) -- Banca Carige SpA has been in contact with 10 potential buyers including Italy’s UniCredit SpA and Banco BPM SpA and France’s BNP Paribas SA, who have expressed a potential interest provided that it reduces its non-performing loans and borrowing costs, according to a person familiar with the matter.

The Genoa-based lender, which was put under temporary administration by the European Central Bank, suffered a peak in deposit flight on Monday, mainly from institutional clients, the person said. An Italian government decision taken the same day aimed at guaranteeing Carige’s future bond issues should limit the outflow, according to the person.

The lender aims to resume talks after having implemented a plan to cut non-performing loans to below 10 percent of total loans and reviewed the terms of a 320 million-euro ($366-million) bond sold to Italy’s deposit guarantee fund late last year, the person said. Potential buyers also include foreign funds, according to the person.

Representatives for UniCredit, Banco BPM and BNP Paribas declined to comment.

At an urgent, night-time cabinet meeting Monday, the Italian government approved state guarantees for any future bond issues by Carige and signaled that aid to the lender could follow the Monte Paschi SpA precedent, a so-called precautionary recapitalization to ward off serious disturbance to the economy.

Read more: Key Lawmaker Cites Bank-Run Risk in Justifying Italy Carige Plan

The government is creating a 1.3 billion-euro support fund for the lender, Corriere della Sera reported Wednesday. The state is also committed to guaranteeing up to 1 billion euros in new shares in the bank if such support is needed, while backing up to 3 billion euros in new bonds which could be issued in the next few weeks, the newspaper said.

The ECB placed the bank under administration after its main investor blocked a vital capital increase in late December, leaving Carige without one of the two pillars of a turnaround plan approved by the central bank. Special administrators were given a three-month mandate to reduce balance sheet risks and find a possible partner.

To contact the reporters on this story: Lorenzo Totaro in Rome at ltotaro@bloomberg.net;Sonia Sirletti in Milan at ssirletti@bloomberg.net

To contact the editors responsible for this story: Simon Kennedy at skennedy4@bloomberg.net, ;Flavia Krause-Jackson at fjackson@bloomberg.net, Jerrold Colten, Kevin Costelloe

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