UniCredit CEO Sees Putting Up to $1.1 Billion in Italy Bank Fund

  • Atlante would be able to take control of a bank, Ghizzoni says
  • Bank shares extend rally for second day; UniCredit rises 3%

UniCredit SpA, Italy’s biggest bank, will invest as much as 1 billion euros ($1.1 billion) in the nation’s Atlante investment fund for banks seeking to offload bad loans and rebuild capital buffers, Chief Executive Officer Federico Ghizzoni said.

Investments in Atlante are intended to be for five years, and can be renewed for three more, Ghizzoni said on the sidelines of the bank’s shareholders’ meeting in Rome Thursday. UniCredit has approval from its board to hold a stake of as much as 20 percent in the fund.

“The fund will make an important contribution to alleviating non-performing debt from the banks’ balance sheets,” Ghizzoni said.

Atlante is intended to buy pools of bad loans from banks and purchase unsold shares in equity offerings, and was created with urgency as Banca Popolare di Vicenza SCpA and Veneto Banca SCpA must raise a combined 3 billion euros to strengthen capital and avoid resolution measures within weeks. Ghizzoni said UniCredit is pushing ahead with the initial public offering of Popolare Vicenza that it’s handling, and if the IPO fails to garner sufficient demand, “the fund will intervene.”

Shares Rally

Government and bank officials agreed late Monday to set up Atlante with funding from banks, insurers and institutional investors, including state-backed investment agency Cassa Depositi e Prestiti SpA. Intesa will invest as much as 1 billion euros and Cassa Depositi 500 million euros, people familiar with the discussions have said.

Italian bank shares led gains in the Stoxx 600 Banks Index, with UniCredit rising 3.2 percent, adding to Wednesday’s 11 percent surge.

Ghizzoni said Atlante will be able to take control of a lender if needed and expects the fund to be operational within weeks, subject to authorization from the European Central Bank. The investment will be accounted for as a financial stake, meaning it won’t appear on UniCredit’s income statement. While UniCredit has committed to investing for at least five years, other Atlante investors can exit before that period ends, Ghizzoni said.

UniCredit plans to tap Atlante to purchase its own bad loans, given banks investing in the fund get priority to do so, Ghizzoni said.

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