Padoan Says Atlante May Need Boost to Address Italy Banks' Needs

  • Fund to be needed `much less' after Vicenza capital increase
  • Padoan says debt-recovery rules to `impact' existing NPLs

Italy’s bank-rescue fund Atlante might need to be strengthened with additional resources to be effective, Finance Minister Pier Carlo Padoan said.

“The private sector might decide to speed it up and to enlarge the size of the resources available,” Padoan said on Wednesday in an interview with Bloomberg Television’s Francine Lacqua in London. “Let’s give Atlante time” to work.

The government-orchestrated banking fund raised 4.25 billion euros ($4.9 billion) from 67 domestic and foreign institutions to help the country’s lenders raise capital and dispose of bad debt. Quaestio Capital Management, which runs the fund, said Atlante will invest as much as 70 percent of its money in capital increases by Italian banks.

‘Looked Inadequate’

“The initial size of the fund certainly looked inadequate,” said Chris Scicluna, London-based head of economic research of Daiwa Capital Markets Europe. “Additional resources should represent a strengthening of the Italian banking sector and be cause for cautious optimism.”

Earlier this month, the Atlante fund stepped in to buy shares of Banca Popolare di Vicenza SpA after investors snubbed its initial public offering.

“Any increase in the fund size is welcome as it would accelerate the clean-up of legacy asset quality problems,” Marco Troiano, director at Scope Ratings AG advisory firm in London.

Atlante’s resources "are somewhat limited," Bank of Italy Governor Ignazio Visco said last week. The fund’s actions might be complemented by other measures passed by the government, including those “to speed up the debt recovery procedures,” Visco said in a May 5 speech in Florence.

“Atlante will be needed much less than in the case of Vicenza, which of course is the most critical situation,” Padoan said in the interview. “I do not see many other critical situations in the banking landscape today.”

Speaking separately in a Bloomberg panel in London, he added that the new rules on debt recovery might also “impact the existing stock” of non-performing loans by acting as an incentive for relations between debtors and creditors established before the legislation entered in force.

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