Banca Popolare di Vicenza SpA, the Italian lender seeking to raise 1.5 billion euros ($1.7 billion) to ensure its survival, may become an attractive takeover target after restoring capital through an initial public offering, Chief Executive Officer Francesco Iorio said.
“After the share sale, the bank will not have capital or liquidity problems, so it will become a decent player,” Iorio said. “We are open to any investor sharing our strategic plan of creating value for the bank.”
Pop. Vicenza is raising money to comply with a request from the European Central Bank, which warned that without a capital increase the lender could be wound down, imposing losses on creditors. The bank’s capital ratios fell below the regulatory minimums after inspectors from the ECB discovered last year that previous managers executed share sales in 2013 and 2014 where they lent 1.1 billion euros to customers and then asked them to purchase the shares at the set price.
Concerns that the bank could be resolved led to a 6 percent slump in deposits this year, Iorio said. Pop. Vicenza recorded 700 million euros to 800 million euros of outflows this year as clients withdrew deposits that exceed the threshold for compensation in the event of a resolution.
The government and lenders this month set up a fund known as Atlante that will back up bank fundraising efforts including Pop. Vicenza’s IPO. Atlante agreed to replace UniCredit SpA, which is underwriting the share sale, as the buyer of any unsold shares.
“In April the deposit outflows stopped,” the CEO said. “I’m confident that after the IPO, with our capital restored, clients will come back.” The bank expects a capital buffer of about 550 million euros after the share sale and that could be raised to 1.1 billion euros through asset sales.