| PADUA, Italy, April 11
PADUA, Italy, April 11 Popolare di Vicenza and
Veneto Banca have removed a big obstacle to a state bailout they
have requested to stay in business by reducing the risk of
shareholder lawsuits, but still face a hard task to win European
Union approval for the rescue plan.
Italy wants to avoid having to wind down the two regional
banks because it fears that ensuing losses for creditors and
major depositors would further dent confidence in its ailing
banking system. The EU Commission must approve the banks'
restructuring plan to unlock state funds.
The two banks said on Tuesday they would pay around 441
million euros ($469 million) to stave off potential legal action
from around 121,000 investors, potentially paving the way for a
The retail investors had their savings wiped out when two
banks were rescued less than a year ago by state-sponsored,
privately funded bailout fund Atlante.
Since then Popolare di Vicenza and Veneto Banca, both based
in Italy's industrial north-east, have had to seek help from the
state to fill a capital shortfall of up to 6.4 billion euros
($6.8 billion) identified by European Central Bank supervisors.
"The two banks were a minefield before the settlement deal
with shareholders," Popolare di Vicenza Chairman Gianni Mion
told a news conference.
"We passed the written test when the ECB declared us viable,
now we have an oral exam to sit through with the European
Commission ... it is very complex work ... but we are hopeful we
can be granted a state recapitalisation."
The two banks, which are both under investigation by
magistrates over alleged misselling of their shares to retail
investors, offered to repay shareholders who bought stock in the
past 10 years 15 percent of their investment losses.
The take-up of the offer was around 70 percent, below a
target of 80 percent but enough to cut the legal risks. Popolare
di Vicenza CEO Fabrizio Viola said such risks would have made it
impossible for the state - or anyone else - to invest.
Viola - who was brought in by Atlante to oversee a merger of
the two banks - said he was working with authorities in Brussels
to agree a restructuring plan that ensured the two banks could
be profitable after a merger.
He said it was imperative to lower a cost-to-income ratio
that was now at around 100 percent but declined to give any
numbers on job cuts after a report in Italian media at the
weekend said the two banks may need to cut 4,000 jobs out of a
total of around 11,000.
"The EU wants a bank that is able to stand on its own two
feet ... trade unions must understand that the situation is
very, very, very serious ... we're not optimising costs here ...
survival is at stake," he said.
Viola said it was too early to provide any details over the
timing of the state bailout and its size.
He said Atlante would discuss with the Italian Treasury and
the EU Commission whether to invest more money in the banks
because the fund wants to curb losses for its contributors which
are the country's leading banks and insurers.
Popolare di Vicenza and Veneto Banca posted a 2016 combined
loss of 3.4 billion euros.
($1 = 0.9413 euros)
(Reporting by Valentina Za. Editing by Jane Merriman)