The Italian bank Banca Carige confirms this week the fact of financial injection of 400 million euros from a number of larger Italian banks and private investors. It was required to meet a deadline of the European Central Bank (ECB).
The bank failed twice this year to raise money through bonds because creditors demanded interest rates that were too high. The ECB had given the Italian bank a plan of action until 30 November to resolve the capitalization issues. The bank says that it has between 320 and 400 million in subordinated funds.
The situation is not unique as many Italian banks owning the government bonds are under pressure. These bonds have fallen considerably in value since the new government installed. The banking sector had just recovered after a deep recession, but is now struggling with rapidly shrinking liquidity and rising costs.
Italian banks have joined forces for a ‘voluntary arrangement’. The financial institutions contribute to this, so that the big banks do not violate the European rules.
Banca Carige has gone through a number of management changes in recent years. The bank hired the US bank UBS as an advisor to investigate possible acquisitions. ECB promised to adjust the deadline once a takeover party is found.
Abaigael Schlomski is an accomplished economist and financial journalist with over a decade of experience in the industry. He is a regular contributor to EconomicInform, where he provides in-depth analysis and expert commentary on the latest economic trends and events. With a keen understanding of the financial markets and a talent for breaking down complex economic concepts for a general audience, Maurice is a trusted and respected voice in the field.