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Banco Popolare says ECB probes how it calculates capital strength 

June 7, 2016

Reuters

The European Central Bank has launched an inspection of how Italy's fourth-largest lender, Banco Popolare, calculates its capital strength and manages its credit risk, the bank said in a share issue prospectus published on Friday.

Banco Popolare is due to kick off on Monday a 1 billion-euro ($1.1 billion) share issue, priced at a 29 percent discount, to help secure a marriage with peer Banca Popolare di Milano to create Italy's third-largest bank.

The two lenders agreed in March to a long-awaited deal which will form a bank with 171 billion euros ($194 billion) in assets, more than 2,400 branches and around 25,000 staff, following pressure from Rome for mergers to strengthen Italy's ailing banking sector.

The reasons behind ECB's inspection were not immediately clear, and representatives of the central bank could not immediately be reached.

Banco Popolare said in the prospectus the ECB inspection, launched on May 16, was ongoing and pertained to its "management of credit risks, risk control systems and the accuracy of methods used to calculate the group's capital position". Read more

 
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