June 29, 2020 / 4:45 PM / 4 days ago

Italy's Popolare di Bari approves transformation and cash call

MILAN (Reuters) - Shareholders in Banco Popolare di Bari approved a plan on Monday to transform the Italian cooperative lender into a joint stock company and raise almost one billion euros ($1.12 billion) in new capital.

The bank said in a statement a cash call of 933 million euros would be subscribed by state-owned Banca del Mezzogiorno-Mediocredito Centrale (MCC) and a depositor protection fund backed by Italian banks (FITD).

MCC and FITD will then take part in restructuring the bank.

Popolare di Bari, the biggest lender in the south of the country, was put under special administration last December, having been weakened by mismanagement, the acquisition of a troubled rival and a deep recession.

“A key step has been taken to strengthen the bank’s capital and its governance which will pave the way for the start of its relaunch,” the lender said.

Popolare di Bari had resisted changes under a 2016 reform aimed at forcing large cooperative banks to turn into regular joint-stock companies to improve governance and management accountability.

But shedding cooperative status, which gives shareholders one vote each regardless of the size of their stake, was a necessary step for it to receive the fresh capital injection.

Earlier on Monday the bank said it had agreed to sell a portfolio of soured loans with a gross value of two billion euros to state-owned bad loan manager AMCO.

The price of the deal was around 500 million euros.

Some 60% of the portfolio to be sold to AMCO was comprised of unlikely-to-pay loans, it said.

Reporting by Stephen Jewkes, editing by Giulia Segreti and David Evans

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