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Italy banking fund could buy small lenders to prevent firesale -chairman
July 23, 2016 / 5:11 PM / a year ago

Italy banking fund could buy small lenders to prevent firesale -chairman

ROME, July 23 (Reuters) - The chairman of Italy’s interbank investor-guarantee fund said on Saturday his group could buy four small lenders rescued last year to prevent them from being sold at firesale prices, according to a newspaper interview.

At least three bids have been tabled for the four banks that were rescued from bankruptcy in November, a source said.

But Italian media reported on Saturday that the highest bid was for no more than 600 million euros ($660 million), far less than their estimated value.

The rescue of Banca Marche, Banca Etruria, CariChieti and CariFe drained 3.6 billion euros from a resolution fund financed by Italian banks, who are hoping to get 1.65 billion euros back with the sale.

“The voluntary arm (of the investor-guarantee fund) is not limited by state-aid rules, and for the banks that participate in the operation, it would be considered an investment, a gain instead of a loss on the balance sheet,” Salvatore Maccarone of the Fondo interbancario di garanzia (Fitd) told Corriere della Sera newspaper.

The Fitd controls a fund that guarantees retail bond investors in the event that a lender is not able to pay back the bonds. It also controls a separate, “voluntary” fund that can be used for investments.

Nevertheless, Fitd would need help from its member banks if it were to buy out the four rescued lenders.

“It would allow more time to clean up the lenders without undercutting their value. The problem is that we don’t have the resources necessary to buy them and then also guarantee the needs of the banks purchased,” he said.

The Italian banking system, which contributes to the Fitd voluntary fund, may need to gather “courage and foresight” to make the investment possible, he said.

Italian banks are struggling with problem loans that run at nearly one-fifth of total lending after a deep recession at a time when negative interest rates eat into profits. ($1 = 0.9113 euros) (Reporting by Steve Scherer; Editing by Hugh Lawson)

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