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Report: Italy's Carige eyes using €320M convertible bond to shore up capital

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Report: Italy's Carige eyes using €320M convertible bond to shore up capital

Banca Carige SpA could use a €320 million convertible bond to bolster its capital and avoid a government rescue, Reuters reported.

The embattled Italian lender plans to begin talks with the Fondo Interbancario di Tutela dei Depositi deposit guarantee fund, which served as underwriter when the securities were issued in late 2018, Fabio Innocenzi, one of the bank's administrators, reportedly told Class CNBC television during an interview.

A source told Reuters that a conversion into shares would help the fund avoid guaranteeing as much as €9.4 billion in deposits if Carige were to be wound up. The bond has a 10-year maturity and pays a 13% fixed-rate coupon.

The ECB, which recently assigned temporary administrators for Carige aimed at stabilizing the bank, had asked the lender to complete its plans to boost its capital and look to merge with a stronger partner.