MILAN: Milan’s stock exchange has rejected the listing of regional bank Popolare di Vicenza, a lender which has become a bellwether for investor sentiment about Italy’s banking sector, after it failed to find sufficient buyers for its €1.7bn capital raising.
Italy’s government-orchestrated €4.25bn bank bailout fund Atlante undertook its first rescue mission at the weekend after the flop of a closely watched capital call at its 10th largest bank Popolare di Vicenza.
At the close of the capital call, Atlante ended up holding more than 90 per cent of the new shares at a price of 10 cents a share after finding zero foreign interest for the shares, writes Rachel Sanderson in Milan.
The plan had been for Popolare Vicenza to list on Milan’s stock exchange following the capital call.
But Borsa Italiana, the Italian stock exchange, said in a statement after market close on Monday that there had been “insufficient” interest from investors for the stock market flotation to go ahead.
Atlante — which was rushed into existence 10 days ago backed by Italy’s strongest lenders as a backstop facility to quell contagion to the banking sector should the capital call fail — shall now take control of the lender, Borsa Italiana said. Atlante intends to restructure the bank, overhaul its governance and put it up for sale, say bankers.
Being forced to stump up for the entire cash call at Popolare Vicenza, Atlante will also have fewer funds available for its secondary purpose: buying up equity tranches of Italy’s bad loans. This also hit market sentiment, bankers said.
Moreover, a law decree passed on Friday by the Renzi government to speed up repossessions – key to trimming its vast pile of bad loans – was less aggressive than expectations, bankers said. While the decree gives stronger powers of repossession on new loans, for the existing stock of loans repossession is not as clear cut and requires an agreement between debtor and creditor.
The travails of Popolare Vicenza hit Italy’s banking stocks on Monday. The lenders hardest hit were those which are considered weak on capital amid fears that if they are forced to tap the market their cash calls would fare poorly, bankers said.
