Banca Carige SpA has sounded out 10 potential buyers, including Italian peers UniCredit SpA and Banco BPM SpA and French lender BNP Paribas SA, Bloomberg News reported.
The potential buyers, which also include foreign funds, have indicated interest in the troubled lender on condition that it cuts its bad loans and borrowing costs, a source told the newswire.
The Italian government has established a €1.3 billion fund to cover the costs of emergency measures aimed at preserving the Genoa bank's stability, according to Reuters.
The government earmarked €1.0 billion to underwrite Carige shares by September-end under a similar precautionary recapitalization scheme that was used for Banca Monte dei Paschi di Siena SpA in 2017.
Italy's Treasury has also been authorized to back up to €3.0 billion in new Carige bonds to be issued by midyear, Reuters reported, adding that the cost of the guarantees to the Treasury could reach up to €300 million.
Carige said it will access state-backed guarantees on bond issues and will only turn to a precautionary recapitalization as a last resort. Its special administrators are due to launch due diligence on its nonperforming exposures, with a view of reducing its NPE ratio to 5% to 10% of total lending, and are also renegotiating the terms of a €320 million bond it recently sold to Italy's deposit guarantee fund.
Efforts by the government to shore up Carige follow the European Central Bank's decision to place the lender under temporary administration after its top investor blocked a crucial €400 million share sale.