UPDATE 4-Bank of Italy puts Popolare di Bari into special administration


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ROME (Reuters) – The Bank of Italy placed Banca Popolare di Bari BPBARI.HT under special administration on Friday as the Cabinet met to approve rescue measures for the cooperative lender, which said this week it needed an urgent injection of up to 1 billion euros.

The bank has struggled to cope with mounting loan losses during a prolonged slowdown that has put thousands of firms out of business. Expectations had grown that the government would need to step in.

Two sources familiar with the matter said the measures being studied were similar to those the government put in place for Genoa-based Carige (CRGI.MI), another regional bank rescued by a fund financed by rival lenders. The measures included a government guarantee for the bank’s debt to support liquidity and a backstop on a capital injection.

Popolare di Bari is the biggest bank in Italy’s economically struggling south and one of two remaining large cooperative lenders which are yet to embrace a 2015 government reform aimed at improving governance and management accountability.

The Bank of Italy appointed two special commissioners to take charge of the bank, which will continue regular operations.

Like thousands of Italians who invested their savings in the shares and bonds of local banks, Popolare di Bari’s 69,000 shareholders stand to lose their money in a rescue, making it a politically sensitive issue.

The move to save the bank adds pressure on the government. Hours earlier Prime Minister Giuseppe Conte said the banking system was in good health and there would be no need for state help for sickly lenders.

The right-wing League opposition party called on Conte to resign immediately. The anti-establishment 5 Star Movement, part of a shaky ruling coalition with the center-left Democratic Party, issued a statement saying it wanted “to rescue savings, not banks”.

Shareholders in cooperative banks have one vote each regardless of the size of their stake, a system which critics say has placed them under undue local influence.

Popolare di Bari Chief Executive Officer Vincenzo De Bustis said in a newspaper interview this week that the bank’s problem debts amounted to a quarter of its loan book, blaming poor lending practices.

Popolare di Bari said last week it aimed to approve a business and capital plan within weeks.

The bank has submitted a preliminary request for help to the FITD depositor guarantee fund which rescued Carige. The fund said it needed to examine Popolare di Bari’s business plan before getting involved.

A source close the fund said its board could meet before Christmas to discuss a rescue.

Popolare di Bari was founded in 1960 by a group of local businessmen and professionals led by Luigi Jacobini, whose family has kept a tight grip on the bank.

Additional reporting and writing by Valentina Za; Editing by Philippa Fletcher and Grant McCool


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