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Report: State recap among options for Veneto Banca, Popolare di Vicenza

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Report: State recap among options for Veneto Banca, Popolare di Vicenza

A precautionary state recapitalization is one of the options being considered for struggling Italian lenders Veneto Banca SpA and Banca Popolare di Vicenza SpA, Reuters reported Feb. 2.

The banks are owned by Italy's Atlante bank rescue fund, which recapitalized them in mid-2016 after share sales failed to generate sufficient investor participation. Paolo Petrignani, CEO of Quaestio Capital Management SGR SpA, which manages Atlante, added that some €1.7 billion that Atlante has set aside to buy bad debt from the lenders could instead be diverted to their recapitalization.

However, Atlante will not, for the time being, be involved in the purchase of Banca Monte dei Paschi di Siena SpA's nonperforming loans, Petrignani added on the sidelines of a conference in Milan, the newswire wrote separately.

"I don't know about later; it depends on whether we get more money," he added.

Italy set up a €20 billion bank rescue fund in late December 2016, when Monte dei Paschi was teetering on the brink of collapse. Some €6.6 billion of the fund is earmarked for a precautionary recapitalization of Monte dei Paschi, and Italian central bank Governor Ignazio Visco said earlier in the week that the remainder would be sufficient to recapitalize the country's other struggling lenders.

Veneto Banca and Popolare di Vicenza also completed issuances of state-guaranteed debt, having received confirmation of the guarantee earlier in the week.

Veneto Banca said Feb. 2 that it issued a pair of state-guaranteed bonds, each amounting to €1.75 billion, according to Reuters. One bond matures Feb. 2, 2019, and has a 0.4% coupon; the other matures a year later and carries a 0.5% coupon.

The bank will either retain the bonds to use as collateral for funding operations or sell them on the secondary market.

Popolare di Vicenza said Feb. 3 that it issued a single €3 billion bond, which matures Feb. 3, 2020, and carries a 0.5% coupon. Like Veneto, it said it could retain the bond for collateral purposes or sell it into the market.