February 28, 2017 / 5:06 PM / 5 months ago

CORRECTED (OFFICIAL)-Carige plans 450 mln euro share issue to boost bad loan coverage

2 Min Read

(Corrects 4th paragraph after bank clarifies that bond conversion is an additional option to share issue)

MILAN, Feb 28 (Reuters) - Italian mid-sized lender Banca Carige said on Tuesday it would raise up to 450 million euros ($478 million) in capital to cut its soured loan burden as requested by European Central Bank supervisors.

The Genoa-based lender, which has long been seen as one of the weak links among Italy's larger banks, said it would reduce the share of impaired debts to 13 percent of total loans under a new business plan to 2020.

Carige's problem loans totalled around one third of overall lending at the end of last year.

To absorb the hit from a planned bad loan spin-off and the increasing of loan loss provisions on remaining soured loans, Carige said it would raise up to 450 million euros in a share sale. The bank may also consider the conversion of its subordinated debt, it said.

Carige said it would close an additional 90 branches to cut the overall number to below 500 as it targeted a cost-income ratio of 59.8 percent and a return on equity of 7.4 percent in 2020. ($1 = 0.9419 euros) (Reporting by Valentina Za)

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