By Stephen Jewkes and Valentina Za
MILAN (Reuters) - Italy's Banca Carige (MI:CRGI) said on Thursday it had failed to secure underwriters for a 560 million euro (499.83 million pounds) share issue, which is a key European Central Bank demand for the bank to safeguard its future.
Carige's difficulty in finding backing for its cash call is a reminder of persistent problems in Italian banking following a deep recession, despite repeated state bailouts of troubled lenders over the past year.
Carige's troubles hit shares in some other Italian banks. Rival Creval (MI:CRGI), which has just announced plans to raise 700 million euros - or 4.4 times its market value - via a share issue, closed down 19 percent.
Genoa-based Carige said it was now assessing whether its restructuring plan could proceed and if the cash call could be delayed. Several sources said the bank was in contact with European regulators over its next steps.
An extraordinary board meeting on Thursday morning was adjourned to the evening and a source close to the matter said Carige CEO Paolo Fiorentino was attempting to widen the underwriting consortium.
Top shareholder Malacalza Investimenti said it had sought regulatory approval to raise its stake to 28 percent from 17.6 percent and it would support Carige, despite recent misunderstandings with banks in the consortium.
Carige has warned that its business could be at risk if the restructuring plan, which also includes asset disposals and a debt swap, does not go through.
Analysts are concerned that failure to launch the rights issue or find a white knight could lead to it being wound down, with the taxpayer or the banking sector picking up the bill.
"Given current market conditions, we do not rule out Banca Carige will be put under resolution," Milan broker Akros said, adding a separation of good and bad assets could ensue with the bank being recapitalised by the state.
Investment banks Credit Suisse , Deutsche Bank and Barclays had conditionally agreed to underwrite Carige's share issue, but Carige said the agreement could not yet be fulfilled. It did not elaborate, but has previously said the deal depended on a number of clauses including positive investor feedback.
Credit Suisse (S:CSGN), Deutsche Bank (DE:DBKGn) and Barclays (L:BARC) had no comment.
ALL ROADS LEAD TO ROME
Rome has this year rescued larger rival Monte dei Paschi di Siena (MI:BMPS) and liquidated two failing regional banks in Veneto, committing up to 23 billion euros of public money.
Like these banks, Carige has been hit by bad loans and poor management. It is heavily exposed to the northwest region of Liguria, which suffered badly during a long recession that ended in 2014, and has lost nearly 3 billion euros since 2013.
Carige's shares have lost roughly half of their value over the past year and is now worth less than 140 million euros.
This is Carige's third cash call since 2014, when it was found short of capital in an industry check-up by the ECB which has given the lender until the end of December to boost capital.
A source familiar with the matter said Carige had tried and failed to convince Italian insurer Unipol (MI:UNPI), which holds its bonds, to take part in the capital increase.
