June 30, 2017 / 1:33 PM / 2 months ago

RPT-Carige, Italian banking's next problem child, to discuss capital plans

(Repeats story first filed on Friday)

* Carige must fill capital shortfall, offload bad debts

* Board meets on Monday after appointment of new CEO

* Regional lenders in Veneto wound down

By Valentina Za

MILAN, June 30 (Reuters) - Genoa-based Banca Carige has been thrust into the spotlight as Italy's remaining large problem bank after Rome's decision to wind down two ailing regional lenders this week and its planned bailout of Monte dei Paschi di Siena.

Carige, the country's ninth-biggest bank, has been told by the European Central Bank it needs to raise capital and shed bad loans, but its restructuring has been delayed by a governance spat that led to the appointment of a new chief executive in June. It holds a board meeting to discuss its plans on Monday.

With assets of 26 billion euros ($29.7 billion) and a capital gap of 600 million euros, Carige is much less of a headache than the two Veneto-based banks Italy put into liquidation on Sunday in a controversial deal largely funded with taxpayer money.

As part of that deal, the government is paying 5.2 billion euros to Intesa Sanpaolo to take on Banca Popolare di Vicenza and Veneto Banca and giving it guarantees for up to 12 billion euros to shield it from any unexpected loss.

Rome says the final bill for the state of the Veneto wind-down will be much smaller than feared and it could even end up making a profit over time.

But coupled with a 6.6 billion euros state bailout for Monte dei Paschi, which should be finalised in the next month, the funds earmarked for the Veneto banks mean Italy has already potentially used up all of the 20 billion euros it set aside in December to deal with its weakest lenders.

Bankers say Italy has finally dealt with its three biggest banking flashpoints, removing a systemic threat that has hung over the whole industry for years.

"Things seem to be looking up at last," the chief executive of a leading Italian bank said, echoing widespread relief within the industry.

"Of course there is still a mountain of bad loans, but that is being gradually whittled down. Carige is a problem but it's a lot more manageable than the Veneto banks."

NEW BOSS

Heavily exposed to the economy of Italy's north-western Liguria region, Carige has lost nearly 2 billion euros in the past four years because of big loan writedowns and slumping revenues.

It appointed former UniCredit's executive Paolo Fiorentino as its new boss on June 21 after the bank's top investor, a local businessman, pushed out his predecessor after just over a year in the job due to a row over how to fix the bank's problems.

Three board members have resigned since in disagreement.

The upheaval is likely to delay a capital increase that former CEO Guido Bastianini had been pencilled in for this summer - the bank's third cash call since 2014.

Carige had a core capital ratio of 10.9 percent at the end of March, below the 11.25 percent minimum threshold set by the ECB. The bank has also been asked by the regulator to halve its gross doubtful loans to 3.7 billion euros by the end of 2019.

However unlike the two Veneto lenders, Carige has no immediate liquidity needs. Its liquidity coverage ratio, a measure of a bank's ability to face cash outflows, stood at 119 percent at end-March, above the ECB threshold of 90 percent.

Carige announced earlier in June the transfer of 938 million euro of 'sofferenze', the worst kind of bad loans, to a special vehicle that will sell them on repackaged as securities with a state guarantee on the senior tranche.

It is not clear whether the bank will proceed with the spin-off of a further 2.4 billion euros in bad loans that Bastianini had been working on. ($1 = 0.8763 euros) (Editing by Silvia Aloisi/Keith Weir)

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