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Banca Carige share issue may not be necessary, administrator says

A share issue by struggling Italian lender Banca Carige SpA might not be necessary if it immediately finds a merger partner or if the bank's special administrators manage to restructure it more efficiently, Reuters reported Jan. 7, citing a statement by Raffaele Lener, one of Carige's administrators, to La Repubblica's Affari & Finanza.

The search for a partner for Carige would take at least six months, Corriere della Sera reported Jan. 6. The Italian treasury's bad bank is reportedly in talks to buy roughly €3.7 billion of bad loans from Carige to help clear its balance sheet and make it more appealing as a target for a merger.

Carige previously issued a €320 million Tier 2 subordinated bond to boost its capital levels, but opted to proceed with a €400 million share sale intended to replace the bond but the share sale was blocked by its biggest shareholder, the Malacalza family. Carige's only remaining option is to convert part of the bond to equity to boost its equity ratio and find a big buyer, according to an analyst.

Lener also said Carige's administrators will seek approval from Italian market regulator Consob for the resumption of trading in the bank's shares and bonds, which are currently suspended, saying the suspension was an issue for Carige's image and liquidity, Reuters added.

Carige's administrators will also meet in the week of Jan. 7 with the heads of Italy's deposit guarantee fund, which subscribed to the bank's €320 million bond to help it boost its capital, Reuters said in a separate report, citing Fondo Interbancario di Tutela dei Depositi Chairman Salvatore Maccarone.