This Italian Bank Lost 83% Market Value in 2018

(Bloomberg) -- Banca Carige SpA plunged in Milan trading after the struggling bank’s biggest investor blocked a planned stock sale at a Dec. 22 shareholders meeting, throwing a vital restructuring into doubt.

The stock fell as much as 19 percent, giving the Genoa-based lender a market value of about 79 million euros ($90 million). The bank has lost 83 percent of its market value this year and now trades at a fraction of a cent as shareholders feud over how to revive its fortunes.

Carige’s proposed 400 million-euro stock offer was blocked last weekend by Malacalza Investimenti, which owns 27.5 percent of the bank, leaving the lender without one of the two pillars of its capital-boosting plan approved by the European Central Bank.

Carige’s board said in a statement late Sunday that it will inform regulators about the outcome of the vote and will keep working “in the interest of clients and shareholders.” Deputy Chairman Lucrezia Reichlin and board member Raffaele Mincione resigned at the board meeting following Malacalza’s action.

Carige’s top management, including Chief Executive Officer Fabio Innocenzi, is expected to meet with ECB officials and representatives of Malacalza on Thursday or Friday, daily Il Sole 24 Ore reported.

Under the plan approved by the ECB, Carige will sell at least 320 million euros of a subordinated Tier 2 bond that will be bought by Italy’s inter-bank fund. Then, the bank planned to repay the bonds with the funds from a sale of stock of as much as 400 million euros.

The ECB also notified the bank last week that the lender could extend the deadline to meet capital-strengthening parameters to Dec. 31, 2019.

The ECB in July had rejected Carige’s previous capital-preservation plan, demanded a new proposal by the end of November and said the bank must meet capital-strength requirements by the end of 2018. As the deadline approached, the bank was shaken by management infighting that culminated in a board revolt led by Malacalza.

©2018 Bloomberg L.P.