Italy preparing measures to rescue Popolare di Bari: sources

By Giuseppe Fonte and Stefano Bernabei

ROME (Reuters) – Italy is preparing a decree for the rescue of Banca Popolare di Bari, and regulators have called in the bank’s board, sources said, after the unlisted cooperative lender revealed a capital shortfall of up to 1 billion euros ($1.1 billion).

Like thousands of ordinary Italians who invested their savings in the shares and bonds of local banks, Popolare di Bari’s 69,000 shareholders stand to lose their money in a rescue, making it a politically sensitive issue.

The bank is the biggest in Italy’s underdeveloped south and one of two remaining large cooperative lenders which are yet to embrace a 2015 government reform aimed at improving governance and management accountability.

Shareholders in cooperative banks have one vote each regardless of the size of their stake, a system which critics say has placed them under undue local influence.

Two sources familiar with the matter said the measures being studied were similar to those the government put in place for Genoa-based Carige (MI:), another regional bank recently rescued by a fund financed by rival lenders.

Like Carige, Popolare di Bari could soon be placed under special administration by banking supervisors, one source said.

In a sign of growing pressure, Bank of Italy supervisors summoned the board of cooperative lender Banca Popolare di Bari on Friday afternoon, another person close to the matter said.

The measures being considered include a government guarantee for the bank’s debt to support liquidity and a backstop on a capital injection.

Italian banks have been hit by a recession that wiped out a quarter of the country’s industrial output and bankrupted thousands of businesses.

Like two unlisted cooperative lenders based in the northern Veneto region which were taken over by heavyweight Intesa Sanpaolo (MI:) in a state-funded 2017 rescue, Popolare di Bari is grappling with mounting loan losses.

Popolare di Bari CEO Vincenzo De Bustis said in a newspaper interview earlier this week that the bank’s problem debts amounted to a quarter of its loan book, blaming poor lending practices.

Popolare di Bari had no immediate comment on Friday but said last week it aimed to approve a business and capital plan within weeks.

The bank has submitted a preliminary request for help to the FITD depositor guarantee fund which rescued Carige. The fund said it needed to examine Popolare di Bari’s business plan before getting involved.

A source close the fund said its board could meet before Christmas to discuss a rescue.

Popolare di Bari was founded in 1960 by a group of local businessmen and professionals led by Luigi Jacobini, whose family has kept a tight grip on the bank.

(Additional reporting and writing by Valentina Za; Editing by Kirsten Donovan and Philippa Fletcher) OLUSECON Reuters US Online Report Economy 20191213T192953+0000

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