Italy's Banca Marche put under special administration

Fri Aug 30, 2013 2:56pm EDT
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By Silvia Aloisi

MILAN (Reuters) - Italian lender Banca Marche has been placed under special administration by the Bank of Italy, becoming the biggest casualty so far of an extended round of balance sheet inspections by the central bank.

Smaller lenders such as Marche are bearing the brunt of Italy's longest recession since World War II, with soaring bad debts stretching their finances, and analysts say some will need more investor capital or state aid.

Banca Marche, one of Italy's top 20 banks, said the Bank of Italy had effectively taken over management after it posted a net loss of 232 million euros ($305.9 million) in the first half due to big writedowns on its loan portfolio.

The lender, the target of an extensive audit by the central bank, said on Friday its Core Tier 1 ratio - a key measure of financial strength - had fallen to 4.29 percent at the end of June, making it one of the weakest in Italy.

Bigger rivals such as UniCredit (CRDI.MI: Quote), Intesa Sanpaolo (ISP.MI: Quote), UBI (UBI.MI: Quote) and Banco Popolare BAPO.MI have ratios of between 9.5 and 11 percent.

The bank had approved a 300 million euro share issue to be carried out by the end of this year, but said on Friday that neither its current shareholders nor new investors had made a binding commitment to take part in the cash call.

The lender had also tried to place a bond for up to 100 million euros with a hefty 12.5 percent coupon by the end of July. However, its Friday statement said the take-up for the bond so far was just 25 million euros.