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Italian senator says rules prevent Carige nationalization: report

2019-01-13 01:16    Investing

Italian senator says rules prevent Carige nationalization: report Stock News

© Reuters. Italian senator says rules prevent Carige nationalization: report

MILAN (Reuters) - Nationalizing Italy's Banca Carige (MI:CRGI) would not be possible under European rules, a senior senator has said, countering suggestions by other members of ruling coalition parties that this would be an option for the troubled bank.

The government set up a 1.3 billion euro ($1.5 billion) fund this week to shore up Carige after the European Central Bank put it under temporary administration following the bank's failure to raise capital from investors.

Rome has several options for state support, including state-backed precautionary recapitalization.

The leader of the ruling 5-Star Movement, Luigi Di Maio, has said Carige would be nationalized if the state put money in, comments echoed by members of the League Party which is also part of the ruling coalition, although Economy Minister Giovanni Tria has said he prefers a market solution.

"I am not aware that a nationalization is a doable path under current rules," Alberto Bagnai, the head of the senate finance committee, told Milano Finanza on Saturday when asked whether it would be better to put Carige in state hands.

Bagnai, an economist and a eurosceptic senator from the right-wing League party, said rules can be "interpreted for friends" but the ruling 5-Star and League coalition "does not yet have many friends in Europe".

Bagnai could not immediately be reached for comment.

Claudio Borghi, another League politician who heads the lower house's budget committee, said one option was to combine Carige with Monte dei Paschi (MI:BMPS), a bank that was bailed out by the state in 2016.

Carige's troubles stem from decades of mismanagement and too much exposure to the depressed local economy.

The ECB has pushed Carige to seek a merger with a stronger rival. Finding a buyer is now one of the tasks of the three commissioners appointed to run Italy's tenth-largest bank.

One of the commissioners said this week nationalization was not currently an option.

Two sources told Reuters on Thursday that Italy's biggest bank UniCredit (MI:CRDI) might consider buying Carige if such a deal came with state financial support.

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