MILAN, Sept 29 (Reuters) - Italy solved one of its remaining banking headaches on Friday as France’s Credit Agricole agreed to take over three small ailing banks for 130 million euros ($153 million).
The sale is part of a rescue deal that sees Italy’s healthy lenders shoulder the bulk of its cost, replicating a scheme applied earlier this year when UBI Banca and BPER Banca took over four small troubled banks.
Italian banks have been weakened by a deep recession that ended in 2014 as the country’s industrial production shrank by a quarter and thousands of businesses went bankrupt.
Credit Agricole said it had agreed to buy 95 percent of savings banks Cassa di Risparmio di Rimini, Cassa di Risparmio di Cesena and Cassa di Risparmio di San Miniato only after they shed impaired loans with a face value of 3 billion euros.
Separately, Italian bank support fund Atlante, which is financed by the country’s healthy lenders, said it would invest 500 million euros to buy a portion of the three banks’ bad debts repackaged as securities.
Investment fund Algebris will buy their remaining problematic loans, worth 286 million euros.
To help the three savings banks shoulder the losses from writedowns necessary to ease the loan disposals, they will receive a capital injection of 470 million euros.
This is necessary to ensure a core capital ratio of 10.7 percent post-writedowns, another condition set by Credit Agricole.
The fresh capital comes from contributions Italian banks paid into a voluntary rescue scheme associated with the country’s FITD depositors’ guarantee fund.
“Thanks to the support ... provided by the banking sector ... the three banks will receive the capital necessary to restructure and become part of an international banking group,” the FITD fund said.
Credit Agricole said the acquisition would boost by more than 20 percent the client base of its Italian unit CA Cariparma, raising its market share by 1 percent. ($1 = 0.8473 euros) (Reporting by Valentina Za; Editing by Elaine Hardcastle)
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