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BlackRock's plan for Italy's Carige sees higher cash call - sources

FILE PHOTO: A sign for BlackRock Inc hangs above their building in New York U.S., July 16, 2018. REUTERS/Lucas Jackson/File Photo

By Stefano Bernabei and Valentina Za

ROME/MILAN (Reuters) - Troubled Italian bank Carige could need a larger-than-expected cash injection of at least 700 million euros (£607 million) under a rescue plan put forward by U.S. asset manager BlackRock, two sources familiar with the matter said.

Temporary administrators appointed by the European Central Bank to run Carige are trying to find a buyer for Italy's 10th-largest bank by mid-May, after its top shareholder derailed an industry-financed rescue by blocking a 400 million euro cash call in December.

A specialist fund run by BlackRock is the only known potential bidder although Italy's government stands ready to step in should a private buyer fail to clinch a deal.

The government, which in 2017 took over Italy's then third-largest bank Monte dei Paschi di Siena, has earmarked up to 1 billion euros to buy Carige shares by the end of September under emergency measures approved at the start of the year.

Reporting a 273 million euro loss for 2018 due to the amount of bad loans it held, the Genoa-based lender said in February it needed to fill a 630 million euro capital shortfall.

Its cash needs could now swell further as the potential buyer looks to build a capital buffer to hedge against possible setbacks in the restructuring process, a third source said.

A fourth source said BlackRock wanted to avoid potential future capital shortfalls in light of some guidelines set by the ECB in relation to Carige.

Both the ECB and BlackRock declined to comment.

The BlackRock fund, which is advised by Mediobanca, is in talks with the Italian lenders who came to Carige's rescue in November by buying a 320 million euro hybrid bond issued by bank to boost its total capital ratio.

A conversion of that bond into equity to reduce the investment required by the BlackRock fund was discussed at a meeting among Italian banks on Wednesday.

The conversion appears likely to take place although no final decision has yet been taken, according to the head of a depositor guarantee fund which bought the Carige bond on behalf of banks.


(Editing by Kirsten Donovan)