Italian banks that own bailed-out peer Carige (CRGI.MI) have refused to pay rival BPER (EMII.MI) 1 billion euros ($1.1 bln) to take the ailing lender off their hands, but left the door open to further discussions.
BPER rushed to submit its non-binding bid on Tuesday after calling an extraordinary board meeting to approve it. Speed was crucial as the local arm of France’s Credit Agricole (CAGR.PA) also appeared to be interested in Carige, which sent its shares higher.
Carige shares closed down 7.2% on Friday, adding to a 2.4% drop on Thursday.
BPER, Italy’s fifth-largest bank, has been steered onto an expansion path by its leading investor, insurer UnipolSAI (US.MI), which wants a larger distribution network for its products.
To take over loss-making Carige, BPER set similar terms to those sought by UniCredit (CRDI.MI) to rescue state-owned Monte dei Paschi (BMPS.MI), which the Rome Treasury has rejected as too costly.
Also Italy’s depositor protection fund, which owns 80% of Carige after the 600 million euro 2019 rescue, late on Thursday said it could not meet BPER’s capital demand.
“The expression of interest contains terms and conditions to be discussed further which at present, for the part concerning the recapitalisation requested for Carige, are not in line with the fund’s by-laws,” the FITD fund said.
Based on last year’s contributions, the fund is allowed to spend up to 600-700 million euros.
“We believe that BPER could reduce its capital injection request from 1 billion euros down to circa 600-700 million euros without jeopardising the positive impact on earnings per share and value,” Kepler Cheuvreux said.
Analysts said BPER could still square the circle thanks to tax benefits designed to ease a sale of Carige which broker Equita said were worth a net 320 million euros.
BPER’s offer expires on Dec. 20 and the fund’s steering committee is expected to meet again Monday.
Genoa-based Carige has already flagged capital needs worth 400 million euros. But cutting staff costs through an expensive early retirement scheme and other steps needed to prep it for a sale are estimated to double the bill.
FITD owns 80% of Carige while Cassa Centrale Banca (CCB), a regional lender that has spurned a proposed Carige acquisition, has an 8.3% stake.
BPER has offered a token 1 euro for the combined 88.3% holding. It would then spend 70 million euros to buy out other investors.
Stronger Italian banks look favourably on the chance to remove a troubled peer from the scene, but smaller lenders and mid-sized players like BPER are reluctant to finance its expansion plans.
The proposed FITD contribution would cover integration and clean up charges, as well as the cost of unwinding Carige’s commercial partnerships.
The Carige deal would boost BPER’s assets by 20% to 150 billion euros, making it Italy’s No. 4 bank and a stronger competitor to No. 3 Banco BPM (BAMI.MI).
($1 = 0.8845 euros)