Veneto Retail Investors Snub IPO, Making Atlante Purchase Likely

  • Shareholders bought just 2.2 percent of 1 billion euros stock
  • Italy’s new rescue fund already took control of one bank

Veneto Banca SpA’s shareholders spurned its initial public offering, signaling that Italy’s new rescue fund will probably be called upon to assume control of a second lender.

Retail investors bought just 2.2 percent of 1 billion euros ($1.1 billion) in stock, the Montebelluna, Treviso-based lender said in a statement Thursday. Institutional investors, who have shown little interest in the stock, still have until 1 p.m. Friday to buy shares. Full results will be released by June 29, the bank said.

A government-orchestrated, privately backed fund has pledged to buy all unsold stock as long as it gets a stake of more than 50 percent. The fund, dubbed Atlante, already took control of Banca Popolare di Vicenza SpA last month after investors balked at its 1.8 billion-euro IPO.

Veneto Banca and Popolare di Vicenza are both plagued by bad loans and capital levels below the regulatory minimum. They are also accused of mismanagement after European Central Bank inspections found they lent money to customers to buy their shares, artificially boosting reserves.

Veneto Banca’s liquidity coverage ratio fell below the 70 percent minimum requirement at the end of May after deposits slumped.

Atlante, named after the mythological titan Atlas, was set up in April to act as a backstop for bank fundraising efforts. Italy is trying to shore up financial system burdened by about 360 billion euros of doubtful loans, an amount equivalent to almost a quarter of the nation’s gross domestic product.

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